FOMC Minutes

Meeting of Federal Open Market Committee July 18, 1972 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, DC., on Tuesday, July 18, 1972, at 9:30 a.m. PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Burns, Chairman Hayes, Vice Chairman Brimmer Bucher Coldwell Daane Eastburn MacLaury Robertson Sheehan Winn Messrs. Heflin and Mayo, Alternate Members of the Federal Open Market Committee Messrs. Morris, Kimbrel, and Clay, Presidents of the Federal Reserve Banks of Boston, Atlanta, and Kansas City, respectively Mr. Broida, Deputy Secretary Messrs. Altmann and Bernard, Assistant Secretaries Mr. Hackley, General Counsel Mr. O'Connell, Assistant General Counsel Mr. Partee, Senior Economist Mr. Axilrod, Economist (Domestic Finance) Mr. Solomon, Economist (International Finance) Messrs. Bryant, Gramley, Green, Hersey, and Hocter, Associate Economists Mr. Holmes, Manager, System Open Market Account Mr. Coombs, Special Manager, System Open Market Account 7/18/72 Mr. Melnicoff, Deputy Executive Director, Board of Governors Mr. Coyne, Special Assistant to the Board of Governors Messrs. Pierce, Wernick, and Williams, Advisers, Division of Research and Statistics, Board of Governors Mr. Pizer, Adviser, Division of International Finance, Board of Governors Messrs. Kiley and Ring, Associate Director and Assistant Director, respectively, Division of Federal Reserve Ban Operations, Board of Governors 1/ Mr. Struble, Economist, Division of Research and Statistics, Board of Governors Mrs. Rehanek, Secretary, Office of the Secretary, Board of Governors Messrs. Leonard and Merritt, First Vice Presidents, Federal Reserve Banks of St. Louis and San Francisco, respectively Messrs. Parthemos, Taylor, Scheld, Tow, and Craven, Senior Vice Presidents, Federal Reserve Banks of Richmond, Atlanta, Chicago, Kansas City, and San Francisco, respectively Mr. Garvy, Economic Adviser, Federal Reserve Bank of New York Mr. Jordan, Vice President, Federal Reserve Bank of St. Louis Mr. Fieleke, Assistant Vice President and Economist, Federal Reserve Bank of Boston Mr. Kaminow, Research Officer and Economist, Federal Reserve Bank of Philadelphia Mr. Duprey, Senior Economist, Federal Reserve Bank of Minneapolis Mr. Sandberg, Manager, Acceptance and Securities Departments, Federal Reserve Bank of New York By unanimous vote, the action of members of the Federal Open Market Committee on July 6, 1972, amending the operational paragraph of the current economic policy directive issued on June 20, 1972, by 1/ Entered meeting at point indicated. -3 7/18/72 the addition of a reference to international developments was 1/ ratified. By unanimous vote, the minutes of actions taken at the meet ing of the Federal Open Market Committee on May 23, 1972, were approved. The memorandum of discussion for the meeting of the Federal Open Market Committee on May 23, 1972, was accepted. By unanimous vote, the System open market transactions in foreign currencies during the period June 20 through July 17, 1972, were approved, ratified, and confirmed. By unanimous vote, renewal for further periods of 3 months of the 8 System drawings on the National Bank of Belgium maturing in the period August 4-25, 1972, was approved. By unanimous vote, renewal for further periods of 3 months of the 2 System drawings on the Swiss National Bank maturing on August 10 and 17, 1972, was approved. By unanimous vote, renewal for further periods of 3 months of the System drawings of Swiss and Belgian francs on the Bank for International Settlements maturing on August 11 and August 18, 1972, respectively, was approved. 1/ With this amendment, the operational paragraph read as follows: To implement this policy, while taking account of possible Treasury financing, developments in capital markets, and inter national developments, the Committee seeks to achieve bank reserve and money market conditions that will support moderate growth in monetary aggregates over the months ahead. 7/18/72 By unanimous vote, renewal for a further period of 3 months of the System drawing on the Bank of England maturing on August 17, 1972, was approved. By unanimous vote, the open market transactions in Government securities, agency obligations, and bankers' acceptances during the period June 20 through July 17, 1972, were approved, ratified, and confirmed. With Mr. Coldwell dissenting, the Federal Reserve Bank of New York was authorized and directed, until otherwise directed by the Committee, to execute transactions for 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 increased at a faster rate in the second quarter than in the two pre ceding quarters. In June the unemployment rate declined, but it was still substantial. Wholesale prices of farm and food products advanced appreciably further in June and the rise in prices of industrial commodities remained substantial. Recent data suggest moderation in the pace of advance in wage rates. In foreign exchange markets, following disturbances leading to a floating of the pound sterling, the dollar has come under pressure and the reserves of European central banks have increased sharply. In May, the excess of merchandise imports over exports remained large, though a little less than in April. Growth in the narrowly defined money stock was relatively slow in May and June, but preliminary weekly data suggest a pickup in early July. Growth in the broadly defined money stock was more substantial as inflows of consumer-type time and savings deposits to banks remained strong. Expansion in the bank credit proxy slowed sharply in June as U.S. Government depos its declined markedly. In recent weeks, long-term interest rates have changed little; rates in short term markets have advanced, except for those on shorter-maturity Treasury bills. 7/18/72 -5 In light of the foregoing developments, it is the policy of the Federal Open Market Committee to foster financial conditions conducive to sustainable real economic growth and increased employment, abatement of inflationary pressures, and attainment of reasonable equilibrium in the country's balance of payments. To implement this policy, while taking account of the forthcoming Treasury financing, developments in capital markets, and international developments, the Committee seeks to achieve bank reserve and money market conditions that will support moderate growth in monetary aggregates over the months ahead. Messrs. Kiley and Ring entered the meeting. By unanimous vote, the procedures for allocation of secu rities in the System Open Market Account were revised to read as follows: 1. Securities in the System Open Market Account shall be reallocated on the last business day of each month by means of adjustments proportionate to the adjustments that would have been required to equalize approximately the average ratios of gold holdings to note liabilities of the 12 Federal Reserve Banks based on the ratios of gold to notes for the most recent five business days. 2. Until the next reallocation the Account shall be apportioned on the basis of the ratios determined in paragraph 1, except that temporary interim adjustments may be made in the apportionments for two or more Banks when desirable in the judgment of the Director of the Board's Division of Federal Reserve Bank Operations and the Manager of the System Open Market Account. 3. Profits and losses on the sale of securities from the Account shall be allocated on the day of delivery of the securities sold on the basis of each Bank's current holdings at the opening of business on that day. -6 7/18/72 It was agreed that the next meeting of the Federal Open Market Committee would be held on Tuesday, August 15, 1972, at 9:30 a.m. The meeting adjourned. Deputy Secretary

Federal Reserve (1972, July 17). FOMC Minutes. Fomc Minutes, Federal Reserve. https://whenthefedspeaks.com/doc/fomc_minutes_19720718

@misc{wtfs_fomc_minutes_19720718,
  author = {Federal Reserve},
  title = {FOMC Minutes},
  year = {1972},
  month = {Jul},
  howpublished = {Fomc Minutes, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/fomc_minutes_19720718},
  note = {Retrieved via When the Fed Speaks corpus}
}