fomc minutes · November 18, 1974

FOMC Minutes

Meeting of Federal Open Market Committee

November 19, 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 Tuesday, November 19, 1974, at

9:30 a.m.

PRESENT:

Mr.

Burns, Chairman

Hayes, Vice Chairman

Black

Bucher

Clay

Coldwell

Holland

Kimbrel

Mitchell

Sheehan

Wallich

Winn

Messrs. MacLaury, Mayo, and Morris, Alternate

Members of the Federal Open Market Committee

Messrs. Balles, Eastburn, and Francis, Presidents

of the Federal Reserve Banks of San Francisco,

Philadelphia, and St. Louis, respectively

Mr. Broida, Secretary

Mr. Altmann, Deputy Secretary

Mr. Bernard, Assistant Secretary

Mr. O'Connell, General Counsel

Mr. Guy, Deputy General Counsel

Mr. Partee, Senior Economist

Mr. Axilrod, Economist (Domestic Finance)

Messrs. Brandt, Doll, Hocter, Parthemos,

and Reynolds, Associate Economists

11/19/74

Mr.

Holmes, Manager, System Open Market

Account

Mr. Coombs, Special Manager, System Open

Market Account

Mr.

Coyne, Assistant to the Board of

Governors

Mr. Wonnacott, Associate Director,

Division of International Finance,

Board of Governors

Mr. Keir, Adviser, 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

Mr.

Plant, First Vice President, Federal

Reserve Bank of Dallas

Messrs. Eisenmenger, Boehne, and Scheld,

Senior Vice Presidents, Federal Reserve

Banks of Boston, Philadelphia, and

Chicago, respectively

Mr. Garvy, Vice President and Senior Adviser,

Federal Reserve Bank of New York

Messrs. Jordan and Green, Vice Presidents,

Federal Reserve Banks of St. Louis and

Dallas, respectively

Mr. Kareken, Economic Adviser, Federal Reserve

Bank of Minneapolis

Mr. Keran, Director of Research, Federal

Reserve Bank of San Francisco

Mr. Cooper, Assistant Vice President, Federal

Reserve Bank of New York

By unanimous vote, the action by Committee members on November

11,

1974, increasing from $500 million to $1 billion

the limit (speci

fied in paragraph 1(b) of the Authorization for Domestic Open Market

Operations)

on holdings of bankers'

acceptances

by the Federal

11/19/74

Reserve Bank of New York,

FOMC meeting,

pending further review at the next

was ratified.

It was agreed that the $1 billion limit on holdings of

bankers' acceptances should be retained.

By unanimous vote, the minutes of actions taken at the

meeting of the Federal Open Market Committee held on October 15,

1974, were approved.

The memorandum of discussion for the meeting of the

Federal Open Market Committee held on October 15, 1974, was

accepted.

By unanimous vote, the System open market transactions

in foreign currencies during the period October 15 through Novem

ber 18, 1974, were approved, ratified, and confirmed.

By unanimous vote, the Committee approved the renewal for

further periods of up to one year of the following swap arrange

ments, having the indicated amounts and maturity dates:

Foreign bank

Austrian National Bank

National Bank of Belgium

Bank of Canada

Amount of

arrangement

(millions of

dollars

equivalent)

250

1,000

2,000

Term

(months)

Maturity date

December 3, 1974

December 20, 1974

December 27, 1974

11/19/74

Foreign bank

Amount of

arrangement

(millions of

dollars

equivalent)

National Bank of Denmark

250

Bank of England

3,000

Bank of France

2,000

German Federal Bank

2,000

Bank of Italy

3,000

Bank of Japan

2,000

Bank of Mexico

180

Netherlands Bank

500

Bank of Norway

250

Bank of Sweden

300

Swiss National Bank

1,400

Bank for International Settlements:

Dollars against

Swiss francs

600

Dollars against other

authorized European

currencies

1,250

Term

(months)

Maturity date

December

1974

December

3, 1974

December

3, 1974

By unanimous vote, the open market transactions in Government

securities, agency obligations, and bankers' acceptances during the

period October 15 through November 18, 1974, 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 accord

ance with the following domestic policy directive:

The information reviewed at this meeting suggests that

real output of goods and services is falling significantly

further in the current quarter while price and wage increases

are continuing large. In October industrial production

declined--after having changed little since May--and the

unemployment rate increased further, from 5.8 to 6.0 per cent.

11/19/74

In recent weeks sizable cutbacks in automobile production

have been announced, and claims for unemployment insurance

There are major uncertainties

have continued to increase.

concerning the duration of the coal strike; a lengthy shut

down would have substantial effects on other industries.

The

October rise in wholesale prices of industrial commodities,

although substantial, remained well below the extraordinarily

rapid rate in the first 8 months of the year; prices of farm

products and foods increased sharply.

In recent weeks the dollar has declined further against

leading foreign currencies.

In the third quarter the U.S.

foreign trade deficit was substantially larger than in the

second quarter, but U.S. banks sharply reduced their foreign

lending.

Growth of the narrowly defined money stock picked up from

the slow pace of the third quarter to an annual rate of

about 5 per cent in October. Net inflows of consumer-type

time and savings deposits at banks and at nonbank thrift

institutions also improved in October, and the money supply

measures more broadly defined expanded appreciably. Bank

credit outstanding changed little, and banks reduced their

borrowing through Euro-dollars and large-denomination CD's.

Since mid-October markets for short- and long-term securities

have improved, despite heavy Treasury financing and a large

volume of corporate security issues. Interest rates on

market securities in general have declined further, and mort

gage yields also have fallen somewhat. On November 13 the

Board of Governors announced a restructuring of member bank

reserve requirements, which will have the effect of releasing

reserves to the banking system in the week beginning

December 12.

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

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

conditions consistent with moderate growth in monetary

aggregates over the months ahead.

-6

11/19/74

It was agreed that the next meeting of the Committee would

be held on December 16 and 17, 1974.

The meeting adjourned.

Secretary

Cite this document

APA

Federal Reserve (1974, November 18). FOMC Minutes. Fomc Minutes, Federal Reserve. https://whenthefedspeaks.com/doc/fomc_minutes_19741119

BibTeX

@misc{wtfs_fomc_minutes_19741119,
  author = {Federal Reserve},
  title = {FOMC Minutes},
  year = {1974},
  month = {Nov},
  howpublished = {Fomc Minutes, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/fomc_minutes_19741119},
  note = {Retrieved via When the Fed Speaks corpus}
}