Keeping the Fed free

It may have just been a spur of the moment remark - perhaps reflecting a slight note of irritation about continuing recession and still historically high interest rates. But when the President of the United States questions, as he did last week, whether it might not be better to place the now essentially independent Federal Reserve Board under the supervision of the secretary of the Treasury, it is not surprising that the banking community, business leaders, and quite a few politicians suddenly wonder if a major administration proposal may be in the works.

The idea of putting the Fed under the control of the US Treasury Department is not all that preposterous, of course. Until the mid-1930s both the Treasury secretary and the comptroller of the currency were members of the Fed's seven-member board of governors.

At the least Mr. Reagan's remark underscores the need for a greater sense of accountability on the part of the secretive central bank - a widespread feeling that the institution must be more responsive to public concerns. Nor is Mr. Reagan's suggestion the only one now being heard for ''reforming'' the bank. Key congressional Democrats have introduced the ''Balanced Monetary Policy Act of 1982'' which would require the Fed to aim for annual targets for real interest rates that are ''consistent with historic levels.'' Historically, such interest rates have tended to range between 1 percent and 4 percent, far lower than current rates.

This newspaper has commented before on the need for greater accountability from the nation's central bank - such as faster announcement of monetary policy decisions, and possibly even some open meetings. Other proposals worth studying involve coterminous terms for the Fed's chairman and vice chairman which would be the same as that of the president. But, in weighing recent suggestions, a couple of things might be kept in mind:

* Money supply figures in recent weeks indicate that the Fed has managed well its task of easing monetary policy without pumping up the money supply so much as to abandon the fight against inflation.

And, of course, interest rates have edged downward.

* Any congressional move that would restrict the ability of the Fed to set its own target levels for money supply growth, and make the appropriate changes or modifications in policy that events dictate, would be unwise. Thus, the Democratic measure would likely do as much harm as good. There is much to be said for insulating the Fed from the vagaries of the short-term political arena.

Greater accountability at the Fed, yes. But not by making the institution an appendage of the Congress or the US Treasury.