FOMC Minutes

Meeting of Federal Open Market Committee

December 19. 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, December 19, 1972, at

10:15 a.m.

PRESENT:

Mr. Burns, Chairman

Mr. Hayes, Vice Chairman

Mr. Brimmer

Mr. Bucher

Mr. Coldwell

Mr. Daane

Mr. Eastburn

Mr. MacLaury

Mr. Mitchell

Mr. Robertson

Mr. Sheehan

Mr. Winn

Messrs. Francis, Heflin, Mayo, and Balles,

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. Hackley, General Counsel

Mr. O'Connell, Assistant General Counsel

Mr. Partee, Senior Economist

Mr. Axilrod, Economist (Domestic Finance)

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

Hocter, Kareken, and Link, Associate

Economists

Mr. Holmes, Manager, System Open Market Account

12/19/72

Mr. Melnicoff, Deputy Executive Director,

Board of Governors

Mr. O'Brien, Special Assistant to the Board

of Governors

Mr. Reynolds, Associate Director, Division

of International Finance, Board of

Governors

Mr. Chase, Associate Director, Division of

Research and Statistics, 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. Wendel, Chief, Government Finance Section,

Division of Research and Statistics, Board

of Governors

Mrs. Rehanek, Open Market Secretariat Assistant,

Office of the Secretary, Board of Governors

Mrs. Sherman, Secretary, Office of the Secretary,

Board of Governors

Messrs. Eisenmenger, Parthemos, Taylor, Scheld,

and Andersen, Senior Vice Presidents,

Federal Reserve Banks of Boston, Richmond,

Atlanta, Chicago, and St. Louis, respectively

Messrs. Bodner and Doll, Vice Presidents,

Federal Reserve Banks of New York and

Kansas City, respectively

Mr. Meek, Assistant Vice President, Federal

Reserve Bank of New York

Mr. Bisignano, Economist, Federal Reserve Bank

of San Francisco

By unanimous vote, the System open market transactions in

foreign currencies during the period November 21 through December 18,

1972, were approved, ratified, and confirmed.

12/19/72

By unanimous vote, renewal for further periods of 3 months

of the three System drawings on the National Bank of Belgium

maturing in the period January 5-26, 1973, was authorized.

By unanimous vote, the open market transactions in

Government securities,

agency obligations,

and bankers'

acceptances

during the period November 21 through December 18, 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

strong recent gains in 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. The unemployment rate has

declined. Wage rates increased little in November,

following 2 months of large increases. Consumer prices

rose considerably again in October, and wholesale

prices rose sharply in November. The over-all deficit

in the U.S. balance of payments has remained substantial

in recent months, but there has been a moderate reduction

in the excess of U.S. merchandise imports over exports

since last spring and summer.

In November rates of growth in the monetary aggre

gates generally remained moderate, but expansion in the

narrowly defined money stock quickened in early December.

In recent weeks most market interest rates have tended

upward.

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

12/19/72

of inflationary pressures, and attainment of reasonable

equilibrium in the country's balance of payments.

To implement this policy, while taking account of

Treasury financing operations and possible credit market

developments, the Committee seeks to achieve bank reserve

and money market conditions that will support slower

growth in monetary aggregates over the months ahead

than appears indicated for the second half of this year.

It was agreed that the next meeting of the Federal Open

Market Committee would be held on Tuesday, January 16, 1973, at

9:30 a.m.

Thereupon the meeting adjourned.

Secretary