FOMC Minutes

Meeting of Federal Open Market Committee

January 11,

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, D. C.,

on Tuesday,

January 11,

1972,

at

9:30 a.m.

PRESENT:

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Burns, Chairman

Hayes, Vice Chairman

Brimmer

Clay

Daane

Kimbrel

Maisel

Mayo

Mitchell

Morris

Robertson

Sheehan

Messrs. Coldwell and Swan, Alternate

Members of the Federal Open Market

Committee

Messrs. Heflin, Francis, and MacLaury,

Presidents of the Federal Reserve Banks

of Richmond, St. Louis, and Minneapolis,

respectively

Mr. Holland, Secretary

Mr. Broida, Deputy Secretary

Messrs. Bernard and Molony, Assistant

Secretaries

Mr. Hexter, Assistant General Counsel

Mr. Partee, Economist

Messrs. Axilrod, Eisenmenger, Scheld,

Solomon, Taylor, and Tow, Associate

Economists

Mr.

Holmes, Manager,

Account

System Open Market

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Mr. Altmann, Assistant Secretary, Office of

the Secretary, Board of Governors

Mr. Chase, Associate Director, Division of

Research and Statistics, Board of

Governors

Messrs. Wernick and Williams, Advisers,

Division of Research and Statistics,

Board of Governors

Messrs. Keir and Pierce, Associate Advisers,

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 Eaton, Open Market Secretariat Assistant,

Office of the Secretary, Board of Governors

Mrs. Rehanek, Secretary, Office of the Secretary,

Board of Governors

Messrs. Willes and MacDonald, First Vice Presidents,

Federal Reserve Banks of Philadelphia and

Cleveland, respectively

Messrs. Link, Parthemos, Andersen, and Craven,

Senior Vice Presidents, Federal Reserve

Banks of New York, Richmond, St. Louis, and

San Francisco, respectively

Messrs. Bodner, Hocter, and Green, Vice Presidents,

Federal Reserve Banks of New York, Cleveland,

and Dallasrespectively

Mr. Kareken, Economic Adviser, Federal Reserve

Bank of Minneapolis

Mr. Kaminow, Research Officer and Economist,

Federal Reserve Bank of Philadelphia

Mr. Sandberg, Securities Trading Officer,

Federal Reserve Bank of New York

By unanimous vote, the action of members of the Federal

Open Market Committee on December 20, 1971, amending the second

paragraph of the current economic policy directive issued

December 14, 1971, by the addition of the words "while taking account

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of international developments" at the end of the last sentence,

was ratified.

With Mr. Robertson dissenting, the action of members

of the Federal Open Market Committee on December 23, 1971,

suspending until close of business on the day of the next

meeting of the Committee the lower limit on interest rates on

repurchase agreements specified in paragraph 1(c) of the con

tinuing authority directive, was ratified.

By unanimous vote, the open market transactions in

Government securities, agency obligations, and bankers' acceptances

during the period December 14, 1971, through January 10, 1972,

were approved, ratified, and confirmed.

With Messrs. Hayes, Brimmer, and Kimbrel dissenting, 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 current

economic policy directive:

The information reviewed at this meeting suggests

that real output of goods and services increased more

rapidly in the fourth quarter than it had in the third

quarter, but the unemployment rate remained high. In

recent weeks wage and price developments have reflected

some increases that had been deferred under the 90-day

freeze. The narrowly defined money stock, which had

not grown on balance from August to November, rose

somewhat in December, while both the broadly defined

money stock and the bank credit proxy increased sub

stantially. Market interest rates, particularly short

term rates, have declined in recent weeks. After inter

national agreement was reached in December on new central

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exchange rates and on wider margins of permissible

variation, market exchange rates for major foreign

currencies against the dollar initially moved to

levels a little above their new lower limits. The

volume of capital reflows to the United States has

been modest, however, and the underlying U.S. balance

of payments remains in deficit. In light of the

foregoing developments, it is the policy of the

Federal Open Market Committee to foster financial

conditions consistent with the aims of the new

governmental program, including 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 international developments and the forthcoming

Treasury financing, the Committee seeks to promote

the degree of ease in bank reserve and money market

conditions essential to greater growth in monetary

aggregates over the months ahead.

By unanimous vote, the System open market transactions in

foreign currencies during the period December 14, 1971, through

January 10, 1972, were approved, ratified, and confirmed.

By unanimous vote, renewal of the nine System drawings

on the National Bank of Belgium maturing in the period February 4-25,

1972,

was authorized.

It was agreed that the next meeting of the Federal Open

Market Committee would be held on Tuesday, February 15, 1972, at

9:30 a.m.

The meeting adjourned.

Secretary