FOMC Minutes

Meeting of Federal Open Market Committee

MINUTES OF ACTIONS

September 10,

1974

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.,

PRESENT:

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

on Tuesday,

September 10,

1974,

at 3:15 p.m.

Burns, Chairman

Hayes, Vice Chairman

Black

Bucher

Clay

Holland

Kimbrel

Mitchell

Sheehan

Wallich

Winn

Messrs. Coldwell, MacLaury, Mayo, and Morris,

Alternate Members of the Federal Open Market

Committee

Messrs. Eastburn, Francis, and Balles, Presidents

of the Federal Reserve Banks of San Francisco,

Philadelphia, and St. Louis, respectively

Mr.

Mr.

Mr.

Mr.

Mr.

Broida, Secretary

Altmann, Deputy Secretary

Bernard, Assistant Secretary 1/

O'Connell, General Counsel

Axilrod, Economist (Domestic Finance)

Mr. Solomon, Economist (International Finance)1/

Messrs. Bryant, Gramley, Parthemos, 1/ Pierce,1/

and Reynolds,1/ Associate Economists

1/

Attended first part of meeting only.

9/10/74

Mr. Coombs,1 / Special Manager, System Open

Market Account

Mr. Sternlight, Deputy Manager, System Open

Market Account

Mr. Coyne,1/ Assistant to the Board of

Governors

Mr. Wonnacott,2/ Associate Director,

Division of International Finance,

Board of Governors

Mr. O'Brien,2/ Special Assistant to the Board

of Governors

2/

Messrs. Keir/ and Williams

, Advisers,

Division of Research and Statistics, Board

of Governors

Mr. Wendel,2/ Assistant Adviser, Division

of Research and Statistics, Board

of Governors

Miss Pruitt,2/ Economist, Open Market

Secretariat, Board of Governors

Mrs. Ferrell,2/ Open Market Secretariat

Assistant, Board of Governors

Messrs. Eisenmenger, 2/Boehne,2/ and Scheld,2/

Senior Vice Presidents, Federal Reserve

Banks of Boston, Philadelphia, and Chicago,

respectively

Mr. Meek,2/ Monetary Adviser, Federal Reserve

Bank of New York

Mr. Fousek,2 / Economic Adviser, Federal Reserve

Bank of New York

Mr. Cox,. Assistant Vice President, Federal

Reserve Bank of Atlanta

Mr. Rolnick,2/ Economist, Federal Reserve Bank

of Minneapolis

1/

2/

Entered meeting at point indicated.

Attended first part of meeting only.

9/10/74

By unanimous vote, the open market transactions in

Government securities, agency obligations, and bankers' accept

ances during the period August 20 through September 9, 1974,

were approved, ratified, and confirmed.

The following actions were taken during the part of the

meeting in which staff attendance was limited.

Messrs. Coombs

and Coyne joined the meeting prior to these actions.

By unanimous vote, the System open market transactions

in foreign currencies during the period August 20 through

September 9, 1974, were approved, ratified, and confirmed.

By unanimous vote, renewal for further periods of 3 months

of two System drawings on the National Bank of Belgium, maturing

on October 15 and 18, 1974, respectively, was authorized.

With Mr. Hayes dissenting, 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 is changing little in the

current quarter, following the first-half decline, and that

price and wage increases are continuing large. In August

industrial production, according to preliminary indications,

remained near the level of recent months, while the unem

ployment rate edged up to 5.4 per cent. Wholesale prices

of farm products rose further, on average, and announcements

of increases for industrial commodities continued numerous.

9/10/74

In recent weeks the dollar has continued to appreciate

against leading foreign currencies. U.S. bank lending to

foreign borrowers diminished in July and apparently also in

August, while inflows from abroad increased. The foreign

trade deficit, which had narrowed in June, widened in July.

In August growth of the narrowly defined money stock

was above the low pace of July but well below the 6 per cent

annual rate of the first half of the year. Net inflows of

time deposits other than money market CD's continued at about

the July rate, but the performance of passbook savings at

banks--and of total deposits at nonbank thrift institutionsremained weak. Although growth in business loans remained

relatively strong in August, growth in total bank credit was

moderate, and banks reduced their reliance on large-denomina

tion CD's and nondeposit funds. Interest rates on most short

term market instruments have changed little on balance since

mid-August, while rates on most types of longer-term securities

On September 4 the Federal Reserve announced

have risen further.

the removal of the 3 per cent marginal reserve requirement on

longer-term, large-denomination CD's.

In light of the foregoing developments, it is the policy

Federal Open Market Committee to foster financial con

the

of

ditions conducive to resisting inflationary pressures,

supporting a resumption of real economic growth, and achieving

equilibrium in the country's balance of payments.

To implement this policy, while taking account of develop

ments in domestic and international financial markets, the

Committee seeks to achieve bank reserve and money market condi

tions consistent with moderate growth in monetary aggregates

over the months ahead.

It was agreed that the next meeting of the Committee would

be on October 15,

1974, at 9:30 a.m.

The meeting adjourned.

Secretary