FOMC Minutes

Meeting of Federal Open Market Committee April 19, 1977 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, April 19, 1977, beginning at 9:00 a.m. PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Burns, Chairman Volcker, Vice Chairman Coldwell Gardner Guffey Jackson Lilly Mayo Morris Partee Roos Wallich Messrs. Baughman, Eastburn, and Winn, Alternate Members of the Federal Open Market Committee Messrs. Black, Kimbrel, and Willes, Presidents of the Federal Reserve Banks of Richmond, Atlanta, and Minneapolis, respectively Mr. Broida, Secretary Mr. Altmann, Deputy Secretary Mr. Bernard, Assistant Secretary Mr. O'Connell, General Counsel Mr. Axilrod, Economist Messrs. Balbach, R. Davis, T. Davis, Ettin, Kichline, Reynolds, Scheld, Truman, and Zeisel, Associate Economists - 4/19/77 2 - Mr. Pardee, Deputy Manager for Foreign Operations Mr. Sternlight, Deputy Manager for Domestic Operations Mr. Hudson, Assistant to the Chairman, Board of Governors Messrs. Coyne and Keir, Assistants to the Board of Governors Mrs. Farar, Economist, Open Market Secretariat, Board of Governors Mrs. Deck, Staff Assistant, Open Market Secretariat, Board of Governors Messrs. Boehne, J. Davis, and Eisenmenger, Senior Vice Presidents, Federal Reserve Banks of Philadelphia, Cleveland, and Boston, respectively Messrs. Brandt, Broaddus, Burns, and Keran, Vice Presidents, Federal Reserve Banks of Atlanta, Richmond, Dallas, and San Francisco, respectively Mr. Sandberg, Assistant Vice President, Federal Reserve Bank of New York Mr. Kareken, Economic Adviser, Federal Reserve Bank of Minneapolis By unanimous vote, the minutes of actions taken at the meeting of the Federal Open Market Committee held on March 15, 1977, were approved. By unanimous vote, System open market transactions in foreign currencies during the period March 15 through April 18, 1977, were approved, ratified, and confirmed. By unanimous vote, System open market transactions in Government securities, agency obligations, and bankers' acceptances during the period March 15 through April 18, 1977, were approved, ratified, and confirmed. - 3 - 4/19/77 With Mr. Partee dissenting, the Committee adopted the following ranges for rates of growth in monetary aggregates for the period from the first quarter of 1977 to the first quarter of 1978: 9-1/2 per cent; M-1, 4-1/2 to 6-1/2 per cent; M-2, 7 to and M-3, 8-1/2 to 11 per cent. 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: The information reviewed at this meeting suggests that growth in real output of goods and services increased in the first quarter from the reduced pace in the fourth quarter In March industrial output, retail of 1976. sales, and employment expanded substantially further. Although the labor force also increased sharply, the unemployment rate The declined from 7.5 to 7.3 per cent. wholesale price index for all commodities again rose substantially; increases were particularly sharp among farm products and foods, and there were sizable advances for many industrial commodities. The index of average wage rates rose in the first quarter of 1977 at a somewhat faster pace than it had on the average during 1976, reflecting largely an increase in the minimum wage. The average value of the dollar against leading foreign currencies has declined some what over the past month, returning to about the level at the beginning of the year. Demand for the Japanese yen and the U.K. 4/19/77 - 4 pound intensified. The U. S. foreign trade deficit continued large in February. M-1 grew at a moderate pace in March but increased substantially in early April. At banks and thrift institutions, inflows of time and savings deposits other than large denomination CD's continued to slacken in March. Market interest rates declined con siderably in mid-April, after having changed little since mid-March. In light of the foregoing developments, it is the policy of the Federal Open Market Committee to foster bank reserve and other financial conditions that will encourage con tinued economic expansion, while resisting inflationary pressures and contributing to a sustainable pattern of international trans actions. Growth in M-1, M-2, and M-3 within ranges of 4-1/2 to 6-1/2 per cent, 7 to 9-1/2 per cent, and 8-1/2 to 11 per cent, respectively, from the first quarter of 1977 to the first quarter of 1978 appears to be consistent with these objectives. These ranges are subject to reconsideration at any time as conditions warrant. The Committee seeks to encourage near-term rates of growth in M-1 and M-2 on a path believed to be reasonably consistent with the longer-run ranges for monetary aggregates cited in the preceding paragraph. Specifically, at present, it expects the annual growth rates over the April-May period to be within the ranges of 6 to 10 per cent for M-1 and 8 to 12 per cent In the judgment of the Committee such for M-2. growth rates are likely to be associated with a weekly average Federal funds rate of about 4-3/4 per cent. If, giving approximately equal weight to M-1 and M-2, it appears that growth rates over the 2-month period will deviate significantly from the midpoints of the indicated ranges, the 4/19/77 - 5 - operational objective for the Federal funds rate shall be modified in an orderly fashion within a range of 4-1/2 to 5-1/4 per cent. If it appears during the period before the next meeting that the operating constraints specified above are proving to be significantly inconsistent, the Manager is promptly to notify the Chairman who will then decide whether the situation calls for supplementary instructions from the Committee. Secretary's Note: On May 6, 1977, by unanimous vote (with Mr. Winn voting as alternate for Mr. Mayo), the Committee modified the intermeeting range for the Federal funds rate specified in the next to last paragraph of the domestic policy directive issued on April 19, 1977, by increasing the upper limit from 5-1/4 to 5-1/2 per cent. It was agreed that the next meeting of the Committee would be held on Tuesday, May 17, 1977, beginning at 9:30 a.m. The meeting adjourned. Secretary

Federal Reserve (1977, April 18). FOMC Minutes. Fomc Minutes, Federal Reserve. https://whenthefedspeaks.com/doc/fomc_minutes_19770419

@misc{wtfs_fomc_minutes_19770419,
  author = {Federal Reserve},
  title = {FOMC Minutes},
  year = {1977},
  month = {Apr},
  howpublished = {Fomc Minutes, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/fomc_minutes_19770419},
  note = {Retrieved via When the Fed Speaks corpus}
}