FOMC Minutes

Meeting of Federal Open Market Committee

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 13, 1973, at

9:30 a.m.

PRESENT:

Mr. Burns, Chairman

Mr. Hayes, Vice Chairman

Mr. Brimmer

Mr. Bucher

Mr. Coldwell

Mr. Eastburn

Mr. MacLaury

Mr. Mitchell

Mr. Robertson

Mr. Sheehan

Mr. Winn

Messrs. Francis, 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

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

Mr. Coombs, Special Manager, System Open Market

Account

2/13/73

Mr. Melnicoff, Deputy Executive Director,

Board of Governors

Mr. Coyne, Assistant to the Board of

Governors

1/

Mr. McIntosh, Director, Division of Federal

Reserve Bank Operations, 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

Mr. Black, First Vice President, Federal Reserve

Bank of Richmond

Messrs. Eisenmenger, Parthemos, Taylor, Scheld,

and Andersen, Senior Vice Presidents,

Federal Reserve Banks of Boston, Richmond,

Atlanta, Chicago, and St. Louis, respectively

Mr. Doll, Vice President, Federal Reserve Bank

of Kansas City

Mr. Cooper, Assistant Vice President, Federal

Reserve Bank of New York

Mr. Bisignano, Economist, Federal Reserve Bank

of San Francisco

By unanimous vote, the minutes of actions taken at the

meeting of the Federal Open Market Committee on December 19, 1972,

were approved.

The memorandum of discussion for the meeting of the Federal

Open Market Committee on December 19, 1972, was accepted.

By unanimous vote, the System open market transactions in

foreign currencies during the period January 16 through February 12,

1973, were approved, ratified, and confirmed.

1/ Attended first part of meeting only.

2/13/73

By unanimous vote, the open market transactions in

Government securities, agency obligations, and bankers' accep

tances during the period January 16 through February 12, 1973,

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 suggests

continued substantial growth in real output of goods

and services in the current quarter, although at a rate

less rapid than in the fourth quarter of 1972. The

unemployment rate has declined slightly further. In

recent months wage rates have increased at a relatively

rapid pace, and unit labor costs turned up in the fourth

quarter of 1972. The rise in consumer prices slowed in

December when retail prices of foods changed little,

but prices of foods and foodstuffs at earlier stages of

distribution rose sharply in both December and January.

The excess of U.S. merchandise imports over exports

remained large in December. Heavy speculative movements

out of dollars into German marks and some other curren

cies developed in late January and early February. On

February 12 the Government announced that the United

States would devalue the dollar by 10 per cent.

The narrowly defined money stock changed little in

January after having increased sharply in December, and

growth over the 2 months combined was at an average

annual rate of about 6-1/2 per cent. Growth in the more

broadly defined money stock slowed less abruptly from

December to January as inflows of consumer-type time

and savings deposits to banks accelerated. A sharp and

pervasive increase has taken place in bank loans to

businesses. In recent weeks market interest rates

generally have risen further, with increases substantial

2/13/73

for short-term rates and relatively moderate for long

term rates. Most recently, however, Treasury bill rates

have moved back down under the influence of foreign

official buying.

In light of the foregoing developments, it is the

policy of the Federal Open Market Committee to foster

financial conditions consonant with the aims of the

economic stabilization program, including further

abatement of inflationary pressures, sustainable

growth in real output and employment, and progress

toward equilibrium in the country's balance of

payments.

To implement this policy, while taking account

of possible domestic credit market and international

developments, the Committee seeks to achieve bank

reserve and money market conditions that will support

somewhat slower growth in monetary aggregates over

the months ahead than occurred on average in the past

6 months.

It

was agreed that the next meeting of the Federal Open

Market Committee would be held on Tuesday,

March 20,

9:30 a.m.

The meeting adjourned.

Secretary

1973,

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