FOMC Minutes

Meeting of Federal Open Market Committee

November 20-21,

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, November 20 and 21,

1972.

The meeting began at 2:30 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

Hayes, Vice Chairman

Brimmer

Bucher

Daane

Eastburn

MacLaury

Mitchell

Robertson

Sheehan

Winn

Francis, Alternate for Mr. Coldwell

Messrs. Heflin and Mayo, Alternate Members of

the Federal Open Market Committee

Messrs. Morris, Kimbrel, Clay, and Balles,

Presidents of the Federal Reserve Banks of

Boston, Atlanta, Kansas City, and San

Francisco, respectively

Mr. Holland, Secretary

Mr. Broida, Deputy Secretary

Messrs. Altmann and Bernard, Assistant

Secretaries

Mr. Hackley, General Counsel

Mr. O'Connell, Assistant General Counsel

11/20-21/72

Mr. Partee, Senior Economist

Mr. Axilrod, Economist (Domestic Finance)

Messrs. Boehne, Bryant, Gramley, Green,

Hersey, Hocter, and Kareken, Associate

Economists

Mr; Holmes, Manager, System Open Market Account

Mr. Coombs, Special Manager, System Open Market

Account

Mr. Melnicoff, Deputy Executive Director,

Board of Governors

Messrs. Coyne and O'Brien, Special Assistants

to the Board of Governors

Mr. Reynolds1/, Associate Director, Division of

International Finance, Board of Governors

Messrs. Keir, Pierce, Wernick, and Williams,

Advisers, Division of Research and

Statistics, Board of Governors

Mr. Pizer, Adviser, Division of International

Finance Board of Governors

Mr. Zeisel 2/Associate Adviser, Division of

Research and Statistics, Board of Governors

2/, Assistant Director, Office of

Mr. Grimwood

Executive Director, Board of Governors

Assistant Director, Division of

Mr. Ring 2/,

Federal Reserve Bank Operations, Board of

Governors 2/

2/

Miss Stockwel 2/ and Mr. Taylor-- Assistant

Advisers, Division of Research and

Statistics, Board of Governors

Mrs. Junz 2/,Assistant Adviser, Division of

International Finance, Board of Governors

Mr. Wendel, Chief, Government Finance Section,

Division of Research and Statistics,

Board of Governors

Messrs. Peret2/ and Wetzel2/, Senior Economists,

Division of Research and Statistics,

Board of Governors

and Wyss 2/, Economists, Division

2/

Messrs. Enzler

of Research and Statistics, Board of Governors

Miss Morrissee 2 / and Mr. Promisel 2/, Economists,

Division of International Finance, Board

of Governors

1/

2/

Attended Tuesday session only.

Attended part or all of Monday session only.

11/20-21/72

Mrs. Sherman, Secretary, Office of the

Secretary, Board of Governors

Mrs. Stanier 1/, Secretary, Office of the

Secretary, Board of Governors

Mr. Plant, First Vice President, Federal

Reserve Bank of Dallas

Messrs. Eisenmenger, Parthemos, Taylor,

Scheld, Andersen, and Craven, Senior

Vice Presidents, Federal Reserve Banks

of Boston, Richmond, Atlanta, Chicago,

St. Louis, and San Francisco, respectively

Mr. Doll, Vice President, Federal Reserve

Bank of Kansas City

Mr. Garvy, Economic Adviser, Federal Reserve

Bank of New York

Mr. Cooper1/, Assistant Vice Presidents,

Federal Reserve Bank of New York

Secretary's note: All of the actions listed

below were taken on Tuesday, November 21, 1972.

By unanimous vote, the minutes of actions taken at the

meetings of the Federal Open Market Committee on September 19 and

October 17, 1972, were approved.

The memoranda of discussion for the meetings of the Federal

Open Market Committee on September 19 and October 17, 1972, were

accepted.

By unanimous vote, the System open market transactions in

foreign currencies during the period October 17 through November 20,

1972, were approved, ratified, and confirmed.

1/ Attended Tuesday session only.

11/20-21/72

By unanimous vote, the Committee approved the renewal, for

periods of up to one year, of the following swap arrangements

having the indicated amounts and maturity dates:

Foreign bank

Amount of

arrangement

(millions of

dollars

equivalent)

Austrian National Bank

200

National Bank of Belgium

600

Bank of Canada

1,000

National Bank of Denmark

200

2,000

Bank of England

1,000

Bank of France

1,000

German Federal Bank

Bank of Italy

1,250

Bank of Japan

1,000

Bank of Mexico

130

Netherlands Bank

300

200

Bank of Norway

250

Bank of Sweden

Swiss National Bank

1,000

Bank for International Settlements:

Dollars against

600

Swiss francs

Dollars against other

authorized European

1,000

currencies

Term

(months)

Maturity date

December

December

December

December

December

December

December

December

December

December

December

December

December

December

1972

1972

1972

1972

1972

1972

1972

1972

1972

1972

1972

1972

1972

1972

12

December

1, 1972

12

December

1, 1972

By unanimous vote, the open market transactions in Government

securities, agency obligations, and bankers' acceptances during the

period October 17 through November 20, 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,

11/20-21/72

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 industrial production, employment, and retail

sales, suggests that real output of goods and services

is growing more rapidly in the current quarter than in

the third quarter. However, the unemployment rate has

remained substantial. The increase in wages has been

larger in recent months than earlier this year. Consumer

prices rose considerably in September, but the October

rise in wholesale prices was small. In recent weeks, the

current account deficit of the U.S. balance of payments

has been offset in large part by capital inflows; while

the reserves of Japan have increased substantially further,

those of other industrial countries have changed little.

In September the excess of U.S. merchandise imports over

exports remained large.

In October rates of growth in the monetary aggregates

changed relatively little from preceding months, with

expansion in the narrowly defined money stock again quite

moderate. Since mid-October interest rates generally have

declined.

In light of the foregoing developments, it is the

policy of the Federal Open Market Committee to foster

financial conditions 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 the

effects of recent bank regulatory changes, the Committee

seeks to achieve bank reserve and money market conditions

that will support more moderate growth in monetary aggre

gates over the months ahead than recorded in the third

quarter.

It was agreed that the authorization for the lending of

Government securities from the System Open Market Account should be

retained at this time.

11/20-21/72

It was agreed that the next meeting of the Federal Open

Market Committee would be held on Tuesday, December 19, 1972, at

9:30 a.m.

The meeting adjourned.

Secretary