FOMC Minutes

Meeting of Federal Open Market Committee

June 19-20, 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 Monday and Tuesday, June 19 and 20, 1972.

The meeting began at 4:15 p.m. on Monday and continued at 9:30 a.m.

on Tuesday.

PRESENT:

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Burns, Chairman

Brimmer

Bucher

Coldwell

Daane

Eastburn

MacLaury

Mitchell

Robertson

Sheehan

Winn

Treiber, Alternate for Mr. Hayes

Messrs, Francis, Heflin, and Mayo, Alternate

Members of the Federal Open Market Committee

Messrs. Morris, Kimbrel, and Clay, Presidents of

the Federal Reserve Banks of Boston, Atlanta,

and Kansas City, respectively

Mr. Holland, Secretary

Mr. Broida, Deputy Secretary

Messrs. Altmann and Bernard, Assistant

Secretaries

Mr. Hexter, Assistant General Counsel

Mr. Partee, Senior Economist

Mr. Axilrod, Economist (Domestic Finance)

Mr. Solomon, Economist (International Finance)

Messrs. Boehne, Bryant, Gramley, Green, Hersey,

Hocter, and Kareken, Associate Economists

6/19-20/72

Mr. Holmes, Manager, System Open Market Account

Mr. Coombs,1/ Special Manager, System Open

Market Account

Mr. Melnicoff, Deputy Executive Director,

Board of Governors

Mr. O'Brien, Special Assistant to the Board of

Governor

Mr. Sammons,- Associate Director, Division of

International Finance, Board of Governors

Messrs. Wernick and Williams, Advisers, Division

of Research and Statistics, Board of Governors

Mr. Gemmill, Adviser, Division of International

Finance Board of Governors

Mr. Zeisel,2 / Associate Adviser, Division of

Research and Statistics, Board of Governors

Miss Stockwell 2/ and Messrs. Ettin 2 / and Taylor,2/

Assistant Advisers, Division of Research

and Statistics, Board of Governors

Mrs. Junz,2/ Assistant Adviser, Division of Inter

national Finance, Board of Governors

Mr. Wendel, Chief, Government Finance Section,

Division of Research and Statistics, Board

of Governors

Messrs. Enzler 2/and Peret,2/ Economist and

Senior Economist, respectively, Division of

Research and Statistics, Board of Governors

Mr. Roxon,2/ Senior Economist, Division of

International Finance, Board of Governors

Miss Eaton, Open Market Secretariat Assistant,

Office of he Secretary, Board of Governors

Mrs. Rehanek,1/ Secretary, Office of the Secretary,

Board of Governors

Mr. Merritt, First Vice President, Federal

Reserve Bank of San Francisco

Messrs. Parthemos, Scheld, Andersen, Tow, and

Craven, Senior Vice Presidents, Federal

Reserve Banks of Richmond, Chicago, St. Louis,

Kansas City, and San Francisco, respectively

Mr. Bodner,2/ Vice President, Federal Reserve

Bank of New York

1/

2/

Attended Tuesday session only.

Attended Monday session only.

6/19-20/72

-3

Mr. Garvy, Economic Adviser, Federal Reserve

Bank of ew York

Mr. Cooper,1/ Assistant Vice President, Federal

Reserve Bank of New York

Mr. Cox, Senior Financial Economist, Federal

Reserve Bank of Atlanta

Mr. McNees, Economist, Federal Reserve Bank

of Boston

Secretary's Note: All of the actions listed below

were taken on Tuesday, June 20, 1972.

By unanimous vote, the minutes of actions taken at the

meeting of the Federal Open Market Committee on April 18, 1972,

were approved.

The memorandum of discussion for the meeting of the Federal

Open Market Committee on April 18. 1972, was accepted.

By unanimous vote, Thomas J. O'Connell was elected Assistant

General Counsel of the Federal Open Market Committee,to serve for the

period from July 1, 1972, until the date of the first meeting of the

Committee after February 28, 1973, with the understanding that in the

event of the discontinuance of his official connection with the Board

of Governors he would cease to have any official connection with the

Federal Open Market Committee.

By unanimous vote, the System open market transactions in

foreign currencies during the period May 23 through June 19, 1972,

were approved, ratified, and confirmed.

By unanimous vote, renewal for further periods of 3 months

of the 4 System drawings on the National Bank of Belgium maturing

in the period July 3-28, 1972 was authorized.

1/

Attended Tuesday session only.

6/20/72

By unanimous vote, the open market transactions in Government

securities, agency obligations, and bankers' acceptances during the

period May 23 through June 19, 1972, 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 for the System Account in accordance with the

following current economic policy directive:

The information reviewed at this meeting, including

recent data for such measures of business activity as

industrial production, employment, and retail sales, sug

gests that real output of goods and services is growing

at a faster rate in the current quarter than in the two

preceding quarters, but the unemployment rate remains

high. In May wholesale prices of farm and food products

advanced appreciably--after having changed little in

April--and the rise in prices of industrial commodities

remained substantial. The most recent data suggest some

moderation in the pace of advance in wage rates. The

U.S. balance of payments has been in surplus in recent

weeks on both the official settlements basis and the net

liquidity basis. In April, however, the excess of mer

chandise imports over exports was even larger than in

February and March. Some strains have developed in

international financial markets recently, involving

European currencies.

Growth in the narrowly defined money stock slowed

further in May, while growth in the broadly defined

money stock stepped up somewhat as inflows of consumer

type time and savings deposits to banks expanded con

siderably; over the April-May period, growth in both

measures of the money stock was well below the high rates

in the first quarter of the year. The outstanding volume

of large-denomination CD's increased substantially further

in May, and expansion in the bank credit proxy remained

rapid. In recent weeks, market interest rates have con

tinued to fluctuate in a narrow range.

6/20/72

In light of the foregoing developments, it is the policy

of the Federal Open Market Committee to foster financial con

ditions conducive to 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 pos

sible Treasury financing and developments in capital markets,

the Committee seeks to achieve bank reserve and money market

conditions that will support moderate growth in monetary

aggregates over the months ahead.

It was agreed that the next meeting of the Federal Open Market

Committee would be held on Tuesday, July 18, 1972, at 9:30 a.m.

The meeting adjourned.

Secretary