FOMC Minutes

Meeting of Federal Open Market Committee

April 15-16,

1974

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, April 15-16,

1974, beginning at 4:00 p.m. on Monday.

PRESENT:

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Burns, Chairman

Hayes, Vice Chairman

Black

Brimmer

Bucher

Clay

Holland

Kimbrel

Mitchell

Sheehan

Wallich

Winn

Messrs. Coldwell, MacLaury, Mayo, and Morris,

Alternate Members of the Federal Open

Market Committee

Mr. Eastburn, President of the Federal Reserve

Bank of Philadelphia

Mr. Broida, Secretary

Mr. Altmann, Deputy Secretary

Mr. Bernard, Assistant Secretary

Mr. O'Connell, General Counsel

Mr. Partee, Senior Economist

Mr. Axilrod, Economist (Domestic Finance)

Messrs. Brandt, Bryant, Davis, Doll, Gramley 1/

Hocter, Parthemos, Pierce, and Reynolds,1/

Associate Economists

1/

Attended Tuesday session only.

4/15-16/74

Mr. Holmes, Manager, System Open Market

Account

Mr. Coyne,1/ Assistant to the Board of

Governors

Mr. O'Brien, Special Assistant to the

Board of Governors

Mr. McWhirter,2/ Associate Director,

Division of Federal Reserve Bank

Operations, Board of Governors

Messrs. Keir and Wernick,3/ Advisers,

Division of Research and Statistics

Board of Governors

Mr. Pizer,3/ Adviser, Division of Inter

national Finance, Board of Governors

Mr. Struble,3/ Senior Economist, Division

of Research and Statistics,

Board of Governors

Miss Pruitt, Economist, Open Market

Secretariat, Board of Governors

Mrs. Ferrell, Open Market Secretariat

Assistant, Board of Governors

Messrs. Leonard and Williams, First Vice

Presidents, Federal Reserve Banks of

St. Louis and San Francisco, respectively

Messrs. Boehne, Scheld, and Sims, Senior Vice

Presidents, Federal Reserve Banks of

Philadelphia, Chicago, and San Francisco,

respectively

Messrs. Willey, Jordan, and Green, Vice

Presidents, Federal Reserve Banks of

New York, St. Louis, ana Dallas,

respectively

Mr. Poole, Adviser, Federal Reserve Bank

of Boston

Mr. Duprey, Senior Economist, Federal

Reserve Bank of Minneapolis

Mr. Gillum,,1/ Economist, Federal Reserve Bank

of Philadelphia

Ms. Tschinkel,3/ Manager, Securities Department,

Federal Reserve Bank of New York

1/

2/

3/

Attended Monday session only.

Participated in meeting at point indicated.

Attended Tuesday session only.

4/15-16/74

Secretary's Note:

The actions listed immediately

below were taken on Monday, April 15, 1974.

By unanimous vote, the minutes of actions taken at the

meeting of the Federal Open Market Committee held on March 18-19,

1974, were approved.

The memorandum of discussion for the meeting of the Federal

Open Market Committee held on March 18-19, 1974, was accepted.

The reports of audit of the System Open Market Account and

of foreign currency operations, made by the Board's Division of

Federal Reserve Bank Operations as at the close of business March

8,

1974,

were accepted.

Mr. McWhirter joined the meeting for the discussion of the

foregoing item.

By unanimous vote, the Committee approved the recommendations

contained in a memorandum from the System Account Manager dated March

15, 1974, entitled "Proposal to bid for Treasury bills on a

noncompetitive basis."

By unanimous vote, the System open market transactions in

foreign currencies during the period March 19 through April 15,

1974, were approved, ratified, and confirmed.

By unanimous vote, renewal for further periods of 3 months

of System drawings on the National Bank of Belgium, the Swiss

National Bank, and the Bank for International Settlements, maturing

in the period May 2-15, 1974, was authorized.

4/15-16/74

-4

By unanimous vote, the open market transactions in

Government securities, agency obligations, and bankers' acceptances

during the period March 19 through April 15, 1974, were approved,

ratified, and confirmed.

Secretary's Note: The following action was taken

on Tuesday, April 16, 1974.

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 real output of goods and services declined appreciably

in the first quarter and that price increases were

exceptionally large. The decline in economic activity

reflected mainly the impact of the oil shortage, which is

being eased by the ending of the oil embargo. In March

industrial production and manufacturing employment receded

further, but retail sales strengthened. The unemployment

rate changed little, remaining slightly above 5 per cent.

Prices of farm and food products declined in March, but

increases among industrial commodities were widespread and

extraordinarily large. Advances in wage rates were moderate

in the first quarter.

In March the dollar depreciated further against leading

foreign currencies, and the balance of payments was in deficit

on the official settlements basis. The U.S. trade surplus

diminished again in February as the cost of imported oil

rose sharply.

4/15-16/74

-5

The narrowly defined money stock increased sharply

again in March. Broader measures of the money stock rose

more moderately, however, as net inflows of consumer-type

time deposits at banks slowed substantially. Business

short-term credit demands remained strong, with demands at

banks exceptionally large. To help finance loan growth,

banks in late March and early April stepped up the issuance

of large-denomination CD's and also increased borrowings from

abroad. Both short- and long-term market interest rates have

risen considerably further in recent weeks.

In light of the foregoing developments, it is the policy

of the Federal Open Market Committee to foster financial

conditions conducive to resisting inflationary pressures,

supporting a resumption of real economic growth, and main

taining equilibrium in the country's balance of payments.

To implement this policy, while taking account of the

forthcoming Treasury financing and of international and

domestic financial market developments, the Committee seeks

to achieve bank reserve and money market conditions that

would moderate growth in monetary aggregates over the months

ahead.

It was agreed that the next meeting of the Committee would

be held on Tuesday, May 21,

1974, at 9:30 a.m.

The meeting adjourned.

Secretary