FOMC Minutes
Meeting of Federal Open Market Committee
February 9, 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, February 9, 1971, at 9:15 a.m.
PRESENT:
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Burns, Chairman
Hayes, Vice Chairman
Brimmer
Daane
Francis
Heflin
Maisel
Mitchell
Robertson 1/
Sherrill
Swan
Mayo, Alternate
Messrs. Kimbrel and Morris, Alternate Members of
the Federal Open Market Committee
Messrs. Eastburn, Clay, and Coidwell, Presidents
of the Federal Reserve Banks of Philadelphia,
Kansas City, and Dallas, respectively
Mr. Holland, Secretary
Mr. Broida, Deputy Secretary
Messrs. Kenyon and Molony, Assistant Secretaries
Mr. Hackley, General Counsel
Mr. Hexter, Assistant General Counsel
Mr. Partee, Economist
Messrs. Axilrod, Craven, Garvy, Gramley, Hersey,
Hocter, Jones, Parthemos, Reynolds, and
Solomon, Associate Economists
Mr. Holmes, Manager, System Open Market Account
Mr. Coombs, Special Manager, System Open Market
Account
1/
Withdrew from the meeting at the point indicated.
2/9/71
Messrs. Bernard and Leonard, Assistant
Secretaries, Office of the Secretary,
Board of Governors
Mr. Cardon, Assistant to the Board of Governors
Mr. Coyne, 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. Wendel, Chief, Government Finance Section,
Division of Research and Statistics,
Board of Governors
Miss Ormsby, Special Assistant, Office of the
Secretary, 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. MacDonald and Strothman, First Vice
Presidents, Federal Reserve Banks of
Cleveland and Minneapolis, respectively
Messrs. Eisenmenger, Taylor, and Tow, Senior
Vice Presidents, Federal Reserve Banks of
Boston, Atlanta, and Kansas City,
respectively
Messrs. Scheld and Green, Vice Presidents,
Federal Reserve Banks of Chicago and
Dallas, respectively
Messrs. Gustus and Kareken, Economic Advisers,
Federal Reserve Banks of Philadelphia and
Minneapolis, respectively
Mr. Meek, Assistant Vice President, Federal
Reserve Bank of New York
By unanimous vote, the minutes of actions taken at the meeting
of the Federal Open Market Committee held on January 12, 1971, were
approved.
By unanimous vote,
the Committee ratified the affirmative action
the members had taken on the recommendation, transmitted by wire of
-3
2/9/71
January 22, 1971, to suspend a provision of paragraph 1(A) of the
continuing authority directive (the provision limiting exchanges with
the Treasury of securities held in System Account to maturing issues)
to the extent of enabling the Account Management to prerefund $4
billion of System Account holdings of the 7-3/4 per cent note of
November 1971 in the current Treasury financing.
By unanimous vote,
the System open market transactions in
foreign currencies during the period January 12 through February 8,
1971, were approved,
ratified, and confirmed.
By unanimous vote, the open market transactions in
Government
securities, agency obligations, and bankers' acceptances during the
period January 12 through February 8,
1971,
were approved,
ratified,
and confirmed.
Mr. Robertson withdrew from the meeting prior to the action
reported below.
With Mr.
Francis dissenting,
New York was authorized and directed,
the Federal Reserve Bank of
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, which declined
in the fourth quarter of 1970, is rising in the current
quarter primarily because of the resumption of higher
automobile production. The unemployment rate remained
high in January. Wage rates in most sectors are con
tinuing to rise at a rapid pace, and recent increases
in some major price measures have been relatively large.
Interest rates have fallen considerably further in recent
2/9/71
weeks despite continued heavy demands for funds in
capital markets, and differentials
between interest
rates in the United States and those in major foreign
countries have widened further.
Federal Reserve discount
rates were reduced by an additional one-quarter of a
percentage point to 5 per cent. Bank credit increased
considerably further in January, as business loan demands
strengthened somewhat and banks made substantial further
additions to their
holdings of securities.
The money
stock narrowly defined grew modestly in January following
a stronger December rise, but money more broadly defined
expanded sharply further as a result of continued rapid
growth in consumer-type time and savings deposits.
The
over-all balance of payments deficit in the fourth
quarter was about as large as in the third quarter on
the liquidity
basis; on the official
settlements basis
the deficit
increased further from the very high third
quarter level as banks continued to repay Euro-dollar
liabilities.
More recently,the issuance of a special
Export-Import Bank security to foreign branches of
U.S. banks helped to moderate the flow of dollars to
foreign central banks.
In light
of the foregoing devel
opments, 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 infla
tion and the attainment of reasonable equilibrium in
the country's balance of payments.
To implement this policy, System open market
operations until
the next meeting of the Committee shall
be conducted with a view to maintaining prevailing
money market conditions while accommodating additional
downward movements in long-term rates; provided that
money market conditions shall promptly be eased somewhat
further if it appears that the monetary aggregates are
falling short of the growth path desired.
It
was agreed that the next meeting of the Federal Open
Market Committee would be held on Tuesday,
March 9,
1971,
The meeting adjourned.
Secretary
at 9:30 a.m.
Cite this document
Federal Reserve (1971, February 8). FOMC Minutes. Fomc Minutes, Federal Reserve. https://whenthefedspeaks.com/doc/fomc_minutes_19710209
@misc{wtfs_fomc_minutes_19710209,
author = {Federal Reserve},
title = {FOMC Minutes},
year = {1971},
month = {Feb},
howpublished = {Fomc Minutes, Federal Reserve},
url = {https://whenthefedspeaks.com/doc/fomc_minutes_19710209},
note = {Retrieved via When the Fed Speaks corpus}
}