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, May 15, 1973, at 9:30 a.m.

PRESENT:

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Burns, Chairman

Hayes, Vice Chairman

Balles

Brimmer

Bucher

Daane

Francis

Mayo

Morris

Sheehan

Messrs. Clay, Eastburn, Kimbrel, and Winn,

Alternate Members of the Federal Open

Market Committee

Messrs. MacLaury and Coldwell, Presidents

of the Federal Reserve Banks of

Minneapolis and Dallas, 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. Andersen, Bryant, Eisenmenger,

Hersey, Reynolds, Scheld, and Sims,

Associate Economists

Mr. Holmes, Manager, System Open Market

Account

Mr. Coombs, Special Manager, System Open

Market Account

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Mr. Melnicoff, Deputy Executive Director,

Board of Governors

Mr. Coyne, Assistant to the Board of

Governors

Mr. O'Brien, Special Assistant to the Board

of Governors

Messrs. Keir, Pierce, Wernick, and Williams,

Advisers, Division of Research and

Statistics, Board of Governors

Mr. Gemmill, Adviser, Division of International

Finance, Board of Governors

Mr. Ettin, Assistant Adviser, Division of

Research and Statistics, Board of

Governors

Mr. Wendel, Chief, Government Finance Section,

Division of Research and Statistics,

Board of Governors

Mrs. Peters, Secretary, Office of the Secretary,

Board of Governors

Mrs. Stanier, Secretary, Office of the

Secretary, Board of Governors

Mr. Black, First Vice President, Federal

Reserve Bank of Richmond

Messrs. Link, Boehne, Parthemos, Taylor, and

Doll, Senior Vice Presidents, Federal

Reserve Banks of New York, Philadelphia,

Richmond, Atlanta, and Kansas City,

respectively

Messrs. Hocter and Green, Vice Presidents,

Federal Reserve Banks of Cleveland and

Dallas, respectively

Mr. Kareken, Economic Adviser, Federal

Reserve Bank of Minneapolis

Mr. Sandberg, Manager, Acceptance and

Securities Departments, Federal Reserve

Bank of New York

By unanimous vote, the minutes of actions taken at the

meetings of the Federal Open Market Committee on March 19-20 and

April 17, 1973, were approved.

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The memoranda of discussion for the meetings of the Federal

Open Market Committee on March 19-20 and April 17, 1973, were

accepted.

By unanimous vote, the System open market transactions in

foreign currencies during the period April 17 through May 14, 1973,

were approved, ratified, and confirmed.

By unanimous vote, the open market transactions in Government

securities, agency obligations, and bankers' acceptances during the

period April 17 through May 14, 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 domestic policy directive:

The information reviewed at this meeting suggests

that growth in real output of goods and services is

likely to moderate somewhat in the current quarter from

an exceptionally rapid pace in the two preceding quar

ters. Over the first 4 months of this year, employment

rose considerably but the unemployment rate remained

about 5 per cent. Retail prices of foods continued

upward at an extraordinary pace in March, and in April

average wholesale prices of consumer foods rose further.

Increases in wholesale prices of industrial commodities

were large and widespread in April, as in the two pre

ceding months. In foreign exchange markets, which had

been relatively quiet since mid-March, speculative

pressures have developed in recent days and exchange

rates for major European currencies have appreciated

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against the dollar. The U.S. merchandise trade balance

improved considerably in the first quarter, reflecting

in part an especially large increase in agricultural

exports.

In April growth in the narrowly defined money stock

picked up from its low first-quarter rate, and growth

in the broadly defined money stock also increased.

Growth in business loans at banks slowed, and banks

reduced the pace at which they issued large-denomination

CD's; consequently, the bank credit proxy expanded

somewhat less than in other recent months. In recent

weeks Federal Reserve Bank discount rates have been

increased in two steps of one-quarter point to 6 per

cent by May 11. Most short-term market interest rates,

which had risen sharply earlier, have advanced slightly

further. Interest rates on long-term market securities

have been relatively stable.

In light of the foregoing developments, it is the

policy of the Federal Open Market Committee to foster

financial conditions conducive to abatement of infla

tionary pressures, a more sustainable rate of advance

in economic activity, and progress toward equilibrium

in the country's balance of payments.

To implement this policy, while taking account of

international and domestic financial market developments,

the Committee seeks to achieve bank reserve and money

market conditions consistent with somewhat slower growth

in monetary aggregates over the months immediately ahead

than occurred on average in the past 6 months.

By unanimous vote, paragraphs (a) and (d) of Section 4 of

the Committee's Rules of Organization were amended, effective

June 1, 1973, to read as follows:

SEC. 4. Staff. (a) Selection of staff officers.

At its first meeting on or after March 1 of each year,

the Committee selects, from among the officers and

employees of the Board and the Federal Reserve Banks, the

following staff officers to serve until the first meeting

on or after March 1 of the next following year:

Secretary,

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Deputy Secretary, and one or more Assistant Secretaries;

General Counsel, Deputy General Counsel, and one or more

Assistant General Counsel; and Economists, one or more

of whom may be designated as Senior or Associate Economists

or given titles reflecting their areas of particular

specialization.

*

*

*

*

*

(d) General Counsel and Deputy

and Assistant General Counsel. The General Counsel

furnishes such legal advice as the Committee may require.

In the absence of the General Counsel, the Deputy General

Counsel or an Assistant General Counsel acts as General

Counsel pro ten.

By unanimous vote, Thomas J. O'Connell, Edward G. Guy,

and John Nicoll were elected General Counsel, Deputy General Counsel,

and Assistant General Counsel, respectively, of the Federal Open

Market Committee, effective June 1, 1973, to serve until the

election of their successors at the first meeting of the Committee

after February 28, 1974, with the understanding that in the event

of the discontinuance of their official connection with the Board

of Governors or with a Federal Reserve Bank, as the case might be,

they would cease to have any official connection with the Federal

Open Market Committee.

It

was agreed that the next meeting of the Federal Open

Market Committee would be held on Monday and Tuesday, June 18-19,

1973, beginning on the afternoon of June 18.

The meeting adjourned.

Deputy Secretary

Deputy Secretary