FED EXECUTIVE UPBEAT ON AREA ECONOMY

Thomas C. Melzer, president and chief executive officer of the Federal Reserve Bank of St. Louis, was impressed with his Wednesday visit here to talk with city and county officials, businessmen and community leaders.

"We see a lot of cooperation and people working together in Cape Girardeau's economic efforts as a regional hub," said Melzer, who has served as president of the Federal Reserve Bank in District 8 almost a decade, since June 1985.

Melzer was here to discus the local economy and monetary policy issues.

The meeting, one of several held throughout the Federal Reserve System, serves a dual purpose, Melzer said. "It gives us an opportunity to gather important information on the area's general economy, and it gives us a chance to talk about the Federal Reserve System," he said.

One Reserve Bank responsibility is to provide monetary policy-makers -- reserve bank presidents and members of the Board of Governors in Washington -- with timely regional economic and financial information.

"We do this a number of ways," Melzer said. "We have area meetings throughout our district. We also have a number of meetings in St. Louis, with various groups and organizations."

The regional information is merged with economic research from the nation and the world.

Area businessmen, county and city officials and community leaders attended the Reserve Bank sponsored luncheon. A number of area bankers were invited for a meeting held later in the day.

"By talking with people in the area we can identify various pockets of the economy," Melzer said. "We discuss any changes in business trends, along with monetary policy issues."

All of these comments are treated in confidence and are used to fit in the reserve system's "big picture," used to formulate and implement the nation's monetary policy in economic growth and stable prices.

"A lot of people don't realize the purpose of the Federal Reserve System," Melzer said.

The Federal Reserve System, established in 1913, is a nationwide network of 12 district banks with 37 additional branches and offices.

"We have a seven-member Board of Governors, headquartered in Washington," Melzer said. The President appoints the board members and the Senate confirms for 14-year terms, which are staggered.

Each of the 12 districts is headed by a president, appointed by the bank's board of directors.

The Federal Reserve Bank of St. Louis serves all of Arkansas, Eastern Missouri, Western Kentucky, Western Tennessee, Southern Illinois, Southern Indiana and Northern Mississippi. Melzer directs the activities of the bank's head office in St. Louis and its three branches in Little Rock, Ark., Louisville, Ky., and Memphis, Tenn.

Melzer also represents the St. Louis bank on the Federal Open Market Committee (FOMC), the Federal Reserve's chief monetary policy-making body.

The FOMC meets eight times a year to discuss the direction of economic activity and to set objectives for key measures of the money supply and credit.

The Federal Reserve System also establishes the discount interest rate charged depository institutions when they borrow money. That rate has increased seven times during the past year.