FOMC Minutes

Meeting of Federal Open Market Committee December 16-17, 1974 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 Monday and Tuesday, December 16-17, 1974, beginning at 4:00 p.m. on Monday. PRESENT: Mr. Mr. Mr. Mr. Mr. Burns, Chairman Hayes, Vice Chairman Black Bucher Clay Coldwell Mr. Holland Mr. Kimbrel Mr. Mitchell Mr. Sheehan Wallich Mr. Winn Messrs. Baughman, MacLaury, Mayo, and Morris, Alternate Members of the Federal Open Market Committee Messrs. Eastburn, Francis, and Balles, Presidents of the Federal Reserve Banks of Philadelphia, St. Louis, and San Francisco, respectively Mr. Mr. Mr. Mr. Mr. Mr. Mr. 1/ Broida, Secretary Altmann, Deputy Secretary O'Connell, General Counsel Guy,1/ Deputy General Counsel Partee, Senior Economist Axilrod, Economist (Domestic Finance) Solomon, Economist (International Finance) Attended Tuesday session only. 12/16-17/74 Messrs. Brandt, Bryant Davis, Doll, Gramley,1/ Hocter, Parthemos,1/ Pierce, and Reynolds,1/ Associate Economists Mr. Holmes, Manager, System Open Market Account Mr. Coombs, Special Manager, System Open Market Account Mr. Wonnacott,1/ Associate Director, Division of International Finance, Board of Governors Mr. O'Brien, Special Assistant to the Board of Governors Messrs. Keir, Kichline,1/ and Wernick,1/ Advisers, Division of Research and Statistics, Board of Governors Mr. Pizer,1/ Adviser, Division of International Finance Board of Governors Mr. Zeisel,1/ Associate Adviser, Division of Research and Statistics, Board of Governors Mrs. Junz,1/ Associate Adviser, Division of International Finance, Board of Governors Messrs. Taylor 1/and Wendel,1/ Assistant Advisers, Division of Research and Statistics, Board of Governors Messrs. Siegman 1/ and Truman,1/ Assistant Advisers, Division of International Finance, Board of Governors Mr. Peret,1/ Assistant to the Director, Division of Research and Statistics, Board of Governors Mr. Smith,1/ Chief, Financial Markets Section, Division of International Finance, Board of Governors Messrs. Beeman 1/ and Enzler,1/ Senior Economists, Division of Research and Statistics, Board of Governors Mr. Roxon,1/ Senior Economist, Division of International Finance, Board of Governors 1/ Attended Monday session only. 12/16-17/74 Mr. Annable,1/ Economist, Division of Research and Statistics, Board of Governors Miss Morisse,1/ Economist, Division of Inter national Finance, Board of Governors Mrs. Farar,2/ Economist, Division of Research and Statistics, Board of Governors Miss Pruitt,1/ Economist, Open Market Secre tariat, Board of Governors Mrs. Ferrell, Open Market Secretariat Assistant, Board of Governors Mr. Rankin, First Vice President, Federal Reserve Bank of Richmond Messrs. Eisenmenger, Boehne, and Scheld, Senior Vice Presidents, Federal Reserve Banks of Boston, Philadelphia, and Chicago, respectively Messrs. Jordan and Green, Vice Presidents, Federal Reserve Banks of St. Louis and Dallas, respectively Mr. Kareken, Economic Adviser, Federal Reserve Bank of Minneapolis Mr. Keran, Director of Research, Federal Reserve Bank of San Francisco Ms. Tschinkel,2/ Manager, Securities Department, Federal Reserve Bank of New York Secretary's note: All of the following actions were taken on Tuesday, December 17, 1974. By unanimous vote, the minutes of actions taken at the meeting of the Federal Open Market Committee held on November 19, 1974, were approved. The memorandum of discussion for the meeting of the Federal Open Market Committee held on November 19, 1974, was accepted. 1/ 2/ Attended Monday session only. Attended Tuesday session only. 12/16-17/74 By unanimous vote, the System open market transactions in foreign currencies during the period November 19 through December 16, 1974, were approved, ratified, and confirmed. By unanimous vote, renewal for further periods of 3 months of two System drawings on the National Bank of Belgium, maturing on January 17 and 24, 1975, respectively, was authorized. By unanimous vote, the open market transactions in Govern ment securities, agency obligations, and bankers' acceptances during the period November 19 through December 16, 1974, were approved, ratified, and confirmed. With Messrs. Mitchell and Wallich dissenting, the Federal Reserve Bank of New York was authorized and directed, until other wise directed by the Committee, to execute transactions for the System Account in accordance with the following domestic policy directive: The information reviewed at this meeting suggests that real output of goods and services is falling substantially further in the current quarter. Price and wage increases are continuing large, although not so large as earlier this year. In November declines in industrial production and employment were sharp and widespread, and the unemployment rate increased further, from 6.0 to 6.5 per cent. In recent weeks additional production cutbacks and layoffs have been announced. The November rise in wholesale prices of indus trial commodities, although substantial, remained well below the extraordinarily rapid rate in the first 8 months of the year. 12/16-17/74 Since mid-November the dollar has declined somewhat further against leading foreign currencies. In October the U.S. foreign trade deficit was reduced sharply for the second consecutive month, while there were continued net inflows of bank-reported private capital and of invest ments by oil-exporting countries. Growth of the narrowly defined money stock increased in November to an annual rate of about 7 per cent. Net inflows of consumer-type time and savings deposits remained strong at banks and continued to improve at nonbank thrift institutions, and the more broadly defined money supply measures again expanded appreciably. Bank loans increased only moderately. Most market interest rates, after rising in the second half of November, subsequently turned down again. Yields on State and local government securities, however, continued under upward pressure. Effective December 9, Federal Reserve discount rates were reduced from 8 to 7-3/4 per cent. In light of the foregoing developments, it is the policy of the Federal Open Market Committee to foster financial conditions conducive to resisting inflationary pressures, cushioning recessionary tendencies and encour aging resumption of real economic growth, and achieving equilibrium in the country's balance of payments. To implement this policy, while taking account of developments in domestic and international financial markets, the Committee seeks to achieve bank reserve and money market conditions consistent with somewhat more rapid growth in monetary aggregates over the months ahead than has occurred in recent months. It was agreed that the next meeting of the Committee would be held on January 21, 1975, at 9:30 a.m. The meeting adjourned. Secretary

Federal Reserve (1974, December 16). FOMC Minutes. Fomc Minutes, Federal Reserve. https://whenthefedspeaks.com/doc/fomc_minutes_19741217

@misc{wtfs_fomc_minutes_19741217,
  author = {Federal Reserve},
  title = {FOMC Minutes},
  year = {1974},
  month = {Dec},
  howpublished = {Fomc Minutes, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/fomc_minutes_19741217},
  note = {Retrieved via When the Fed Speaks corpus}
}