FOMC Minutes

Meeting of Federal Open Market Committee June 29, 1971 MINUTES OF ACTIONS A meeting of the Federal Open Market Committee was held in the offices of the Board of Governors of the Federal Reserve System in Washington, D.C., on Tuesday, June 29, 1971, at 9:30 a.m. PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Burns, Chairman Hayes, Vice Chairman Brimmer Clay Daane Maisel Mayo Mitchell Morris Robertson Sherrill Coldwell, Alternate for Mr. Kimbrel Mr. Swan. Alternate Member of the Federal Open Market Committee Messrs. Heflin and Francis, Presidents of the Federal Reserve Banks of Richmond and St. Louis, respectively Mr. Holland, Secretary Mr. Broida, Deputy Secretary Mr. Molony, Assistant Secretary Mr. Hackley, General Counsel Mr. Hexter, Assistant General Counsel Mr. Partee, Economist Messrs. Garvy, Gramley, Hersey, Scheld, Taylor, and Tow, Associate Economists Mr. Holmes, Manager, System Open Market Account Mr. Coombs, Special Manager, Syster Open Market Account 6/29/71 Mr. Leonard, Assistant Secretary, Office of the Secretary, Board of Governors Mr. Cardon, Assistant to the Board of Governors Mr. O'Brien, Special Assistant to the Board of Governors Messrs. Wernick and Williams, Advisers, Division of Research and Statistics, Board of Governors Mr. Keir, Associate Adviser, Division of Research and Statistics, Board of Governors Mr. Bryant, Associate Adviser, Division of International Finance, Board of Governors Mr. Zeisel, Assistant Adviser, Division of Research and Statistics, Board of Governors Mr. Wendel, Chief, Government Finance Section, Division of Research and Statistics, Board of Governors Miss Eaton, Open Market Secretariat Assistant, Office of the Secretary, Board of Governors Miss Orr, Secretary, Office of the Secretary, Board of Governors Messrs. Melnicoff, MacDonald, Fossum, and Strothman, First Vice Presidents, Federal Reserve Banks of Philadelphia, Cleveland, Atlanta, and Minneapolis, respectively Messrs. Parthemos and Craven, Senior Vice Presidents, Federal Reserve Banks of Richmond and San Francisco, respectively Messrs. Willes, Hocter, Jordan, Nelson, and Green, Vice Presidents, Federal Reserve Banks of Philadelphia, Cleveland, St. Louis, Minneapolis, and Dallas, respectively Mr. Anderson, Assistant Vice President, Federal Reserve Bank of Boston Mr. Cooper, Manager, Securities and Acceptance Departments, Federal Reserve Bank of New York -3 6/29/71 By unanimous vote, the System open market transactions in foreign currencies during the period June 8 through 28, 1971, were approved, ratified, and confirmed. By unanimous vote, renewal if necessary of the three System drawings on the National Bank of Belgium maturing in the period July 26-August 3, 1971, was authorized. By unanimous vote, the open market transactions in Government securities, agency obligations, and bankers' accep tances during the period June 8 through 28, 1971, were approve, ratified, and confirmed. By unanimous vote, the dollar limit specified in para graph 2 of the continuing authority directive, on Federal Reserve Bank holdings of short-term certificates of indebtedness purchased directly from the Treasury, was decreased from $2 billion to $1 billion. As amended, paragraph 2 read as follows: The Federal Open Market Committee authorizes and directs the Federal Reserve Bank of New York, or, if the New York Reserve Bank is closed, any other Federal Reserve Bank, to purchase directly from the Treasury for its own account (with discretion, in cases where it seems desirable, to issue participations to one or more Federal Reserve Banks) such amounts of special short-term certificates of indebtedness as may be necessary from time to time for the temporary accom modation of the Treasury; provided that the rate charged on such certificates shall be a rate 1/4 of 1 per cent below the discount rate of the Federal Reserve Bank of New York at the time of such purchases, and provided further that the total amount of such certificates held at any one time by the Federal Reserve Banks shall not exceed $1 billion. 6/29/71 By unanimous vote, the Federal Reserve Bank of New York was authorized and directed, until otherwise directed by the Committee, to execute transactions in the System Account in accordance with the following current economic policy directive: The information reviewed at this meeting suggests that real output of goods and services is expanding moderately in the current quarter and that the unem ployment rate has remained high. Wage rates in most sectors are continuing to rise at a rapid pace. The rate of advance in both consumer prices and wholesale prices of industrial commodities has stepped up again recently after moderating earlier in the year. In June, according to tentative estimates, the money stock both narrowly and broadly defined is still grow ing rapidly on average, although less than in May; growth in the bank credit proxy remains below the first-quarter rate. Interest rates on most types of market securities have increased on balance in recent weeks. The market exchange rate for the German mark has advanced, and a substantial flow of funds from Germany to other markets has occurred in recent weeks. In consequence of a partial reversal of the earlier speculative outflows of short-term capital from the United States and of an increase in Euro-dollar bor rowings of U.S. banks, there has been a surplus in the U.S. payments balance on the official settlements basis in this period. The U.S. merchandise trade balance, which had been in small surplus in the first quarter, was in deficit in April and May. In light of the foregoing developments, it is the policy of the Federal Open Market Committee to foster financial conditions conducive to the resumption of sustainable economic growth, while encouraging an orderly reduction in the rate of inflation, moderation of short-term capital outflows, and attainment of reasonable equi librium in the country's balance of payments. To implement this policy, the Committee seeks to achieve more moderate growth in monetary aggregates over the months ahead, taking account of developments in capital markets. System open market operations 6/29/71 until the next meeting of the Committee shall be conducted with a view to achieving bank reserve and money market conditions consistent with those objectives. It was agreed that the next meeting of the Federal Open Market Committee would be held on Tuesday, July 27, 1971, at 9:30 a.m. The meeting adjourned. Secretary

Federal Reserve (1971, June 28). FOMC Minutes. Fomc Minutes, Federal Reserve. https://whenthefedspeaks.com/doc/fomc_minutes_19710629

@misc{wtfs_fomc_minutes_19710629,
  author = {Federal Reserve},
  title = {FOMC Minutes},
  year = {1971},
  month = {Jun},
  howpublished = {Fomc Minutes, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/fomc_minutes_19710629},
  note = {Retrieved via When the Fed Speaks corpus}
}