FOMC Minutes

Meeting of Federal Open Market Committee February 17 - 18, 1976 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., 17-18, on Tuesday and Wednesday, February 1976, beginning at 4:00 p.m. on Tuesday. PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Burns, Chairman Volcker, Vice Chairman Baughman Coldwell Eastburn Holland Jackson MacLaury Mayo Partee Wallich Messrs. Balles, Black, and Winn, Alternate Members of the Federal Open Market Committee Messrs. Clay, Kimbrel, and Morris, Presidents of the Federal Reserve Banks of Kansas City, Atlanta, and Boston, respectively Mr. Broida, Secretary Mr. Altmann, Deputy Secretary Mr. Bernard, Assistant Secretary Mr. O'Connell, General Counsel Mr. Axilrod, Economist (Domestic Finance) Mr. Gramley, Economist (Domestic Business) Messrs. Boehne, Davis, Green, Kareken, Reynolds, and Scheld, Associate Economists 2/17-18/76 Mr. Holmes, Manager, System Open Market Account Mr. Pardee, Deputy Manager for Foreign Operations Mr. Sternlight, Deputy Manager for Domestic Operations Mr. Coyne, Assistant to the Board of Governors Associate Messrs. Kichline and Zeisel, Directors, Division of Research and Statistics, Board of Governors Mr. Keir, Adviser, Division of Research and Statistics, Board of Governors Mr. Gemmill,1/ Adviser, Division of International Finance, Board of Governors Mrs. Farar, Economist, Open Market Secretariat, Board of Governors Mrs. Ferrell, Open Market Secretariat Assistant, Board of Governors Mr. Leonard, First Vice President, Federal Reserve Bank of St. Louis Messrs. Eisenmenger,2/ Parthemos, Balbach, and Doll, Senior Vice Presidents, Federal Reserve Banks of Boston, Richmond, St. Louis, and Kansas City, respectively Messrs. Brandt and Keran, Vice Presidents, Federal Reserve Banks of Atlanta and San Francisco, respectively Ms. Tschinkel, Adviser, Open Market Operations, Federal Reserve Bank of New York Mr. Hall, Economist, Federal Reserve Bank of Cleveland Secretary's note: All of the following actions were taken on Wednesday, February 18, 1976. By unanimous vote, the minutes of actions taken at the meeting of the Federal Open Market Committee on January 20, were approved. 1/ 2/ Attended Wednesday session only. Attended Tuesday session only. 1976, By unanimous vote, the System open market transactions in foreign currencies during the period January 20, 1976, through February 17, 1976, were approved, ratified, and confirmed. By unanimous vote, paragraph 6 of the Authorization for Foreign Currency Operations was amended to read as follows: 6. The Foreign Currency Subcommittee is authorized to act on behalf of the Committee when it is necessary to enable the Federal Reserve Bank of New York to engage in foreign currency operations before the Committee can be consulted. The Foreign Currency Subcommittee consists of the Chairman and Vice Chairman of the Committee, the Vice Chairman of the Board of Governors, and such other member of the Board as the Chairman may designate (or in the absence of members of the Board serving on the Subcommittee, other Board Members designated by the Chairman as alternates, and in the absence of the Vice Chairman of the Committee, his alternate). All actions taken by the Foreign Currency Subcommittee under this paragraph shall be reported promptly to the Committee. By unanimous vote, the open market transactions in Government securities, agency obligations, and bankers' acceptances during the period January 20, 1976, through February 17, 1976, were approved, ratified, and confirmed. 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 domestic policy directive: 2/18/76 -4 The information reviewed at this meeting suggests that output of goods and services is continuing to expand at a moderate rate in the current quarter. In January retail sales remained at an advanced level and recovery in industrial production continued. Gains in nonfarm employ ment were large and widespread and the unemployment rate dropped from 8.3 per cent to 7.8 per cent. Average whole sale prices of industrial commodities increased somewhat less than in the preceding 2 months, and average prices of farm products and foods declined appreciably further. The index of average wage rates advanced substantially in January, but a significant part of the rise reflected an increase in the minimum wage on the first of the month. The trade-weighted value of the dollar has changed little over the past 4 weeks. There have been disturbances in foreign exchange markets affecting primarily European currencies, and rates for several currencies have moved considerably. In December the foreign trade surplus was substantial, although not as large as in other recent months, and bank-reported private capital movements shifted to a net outflow. M1, which had declined in December, increased only a little in January, but M2 and M3 rose considerably. At commercial banks and nonbank thrift institutions, inflows of time and savings deposits other than large-denomination CD's expanded substantially. Inflows into savings accounts were especially large in January, as short-term market interest rates continued to decline early in the month and fell below Regulation Q ceiling rates on such accounts. In recent weeks, interest rates on both short- and long-term securities have changed little, while mortgage interest rates have declined somewhat. In light of the foregoing developments, it is the policy of the Federal Open Market Committee to foster financial conditions that will encourage continued economic recovery, while resisting inflationary pressures and contributing to a sustainable pattern of international transactions. -5- 2/18/76 To implement this policy, while taking account of developments in domestic and international financial markets, the Committee seeks to maintain prevailing bank reserve and money market conditions over the period immediately ahead, provided that monetary aggregates appear to be growing at about the rates currently expected. It was agreed that the next meeting of the Committee would be held on Tuesday, March 16, 1976. The meeting adjourned. Secretary

Federal Reserve (1976, February 17). FOMC Minutes. Fomc Minutes, Federal Reserve. https://whenthefedspeaks.com/doc/fomc_minutes_19760218

@misc{wtfs_fomc_minutes_19760218,
  author = {Federal Reserve},
  title = {FOMC Minutes},
  year = {1976},
  month = {Feb},
  howpublished = {Fomc Minutes, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/fomc_minutes_19760218},
  note = {Retrieved via When the Fed Speaks corpus}
}