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Federal Reserve Vice Chairman Rivlin to Step Down from Post

By Peter G. Gosselin

Federal Reserve Vice Chairman Alice M. Rivlin, a staunch supporter of the central bank’s strategy of letting the U.S. economy race forward even at some risk of inflation, unexpectedly announced Thursday that she will resign, saying that she wants to devote more time to untangling the finances of the city of Washington.

Rivlin’s departure in mid-July is not likely to make much difference to Fed policy, but will give President Clinton the chance to appoint another member to the central bank, which has effectively become the most powerful government manager of the economy in recent decades.

And while her voice on policy was muted, others said that she will be missed as a conciliatory presence.

“She was the glue that held the consensus together,” said David M. Jones, a veteran Fed-watcher and chief economist of Aubey G. Lanston & Co. in New York.

For the 68-year-old Rivlin, the departure will mean the end of a string of high-profile, high-pressure assignments in recent years. Before arriving at the Fed in June 1996, she was director of the White House Office of Management and Budget during the height of the budget battles between Clinton and the Republican-controlled Congress that resulted in a government shutdown.

“She’s had a role in just about every policy battle that has occupied Washington in recent decades,” said Robert D. Reischauer, a veteran economist with the Brookings Institution, the Washington think tank that Rivlin will rejoin when she leaves the Fed. “She’s had a remarkably varied and productive career in policy-making in Washington.”

Originally, Rivlin was not expected to wield much influence at the Fed, in part because she was replacing Princeton economist Alan S. Blinder who clashed with Fed Chairman Alan Greenspan and in part because her specialty was the nuts and bolts of government budgets, not monetary policy.

But analysts said she made a name for herself by tackling arcane technical issues faced by the Fed and settled in as a staunch ally of Greenspan in his struggle to maintain low interest rates even in the face of trends that seemingly could spark inflation.

Besides her policy role, she is credited with improving the internal management of the Fed, which appeared at times sleepy, and with advancing the careers of women at the male-dominated institution.