FOMC Minutes

Meeting of Federal Open Market Committee

January 20-21, 1975

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, January 20-21,

1975, beginning at 4:00 p.m. on Monday.

PRESENT:

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Burns, Chairman

Black

Bucher

Clay

Coldwell

Holland

Kimbrel

Mitchell

Sheehan 1/

Wallich

Winn

Debs, Alternate for Mr. Hayes

Messrs. Baughman, MacLaury, Mayo, and Morris,

Alternate Members of the Federal Open Market

Committee

Messrs. Eastburn, Francis, and Balles, Presidents

of the Federal Reserve Banks of Philadelphia,

St. Louis, and San Francisco, respectively

Mr.

Mr.

Mr.

Mr.

1/

Broida, Secretary

Altmann, Deputy Secretary

Bernard, Assistant Secretary

O'Connell, General Counsel

Attended Tuesday session only.

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Mr. Partee, Senior Economist

Mr. Solomon, Economist (International Finance)

Mr. Axilrod, Economist (Domestic Finance)

Messrs. Brandt, Bryant, Davis, Doll, Hocter,

Parthemos, Pierce, and Reynolds, Associate

Economists

Mr. Holmes, Manager, System Open Market

Account

Mr. Coyne,1 / Assistant to the Board of

Governors

Mr. Keir, Adviser, Division of Research and

Statistics, Board of Governors

Mrs. Farar, Economist, Division of Research

and Statistics, Board of Governors

Mrs. Ferrell, Open Market Secretariat

Assistant, Board of Governors

Messrs. Eisenmenger, Scheld, and Jordan, Senior

Vice Presidents, Federal Reserve Banks of

Boston, Chicago, and St. Louis, respectively

Mr. Meek, Monetary Adviser, Federal Reserve

Bank of New York

Messrs. Pardee, Kaminow, and Green, Vice

Presidents, Federal Reserve Banks of

New York, Philadelphia, and Dallas,

respectively

Mr. Kareken, Economic Adviser, Federal

Reserve Bank of Minneapolis

Mr. Keran, Director of Research, Federal Reserve

Bank of San Francisco

The actions listed immediately

Secretary's note:

below were taken on Monday, January 20, 1975.

By unanimous vote, the System open market transactions in

foreign currencies during the period December 17, 1974, through

January 20, 1975, were approved, ratified, and confirmed.

1/

Attended Tuesday session only.

1/20-21/75

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 February 4-14, 1975, was authorized.

Secretary's note: All of the following actions were

taken on Tuesday, January 21, 1975.

By unanimous vote, the minutes of actions taken at the

meeting of the Federal Open Market Committee held on December

16-17, 1974, were approved.

The memorandum of discussion for the meeting of the Federal

Open Market Committee held on December 16-17, 1974, was accepted.

By unanimous vote, the open market transactions in Govern

ment securities, agency obligations, and bankers' acceptances

during the period December 17, 1974, through January 20, 1975,

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 real output of goods and services fell sharply in

the fourth quarter of 1974 and that further declines

are in prospect for the months immediately ahead. In

December declines in industrial production and employment

again were sharp and widespread, and the unemployment rate

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increased from 6.5 to 7.1 per cent. Average wholesale

prices of industrial commodities were unchanged, after

having risen much less rapidly from August to November

than earlier in the year, and prices of farm and food

products declined. In recent months increases in

average wage rates have been large, but not so large as

in the spring and summer.

In his State of the Union message, the President set

forth a program of fiscal stimulus, including tax rebates

for individuals and a temporary increase in the investment

tax credit for business. The President also proposed

a new program to reduce the consumption of energy;

the program includes new taxes in the energy area along

with measures of tax relief that, on balance, are de

signed to have a neutral effect on the size of the Federal

deficit.

The dollar in December and early January continued

the gradual decline against leading foreign currencies

that began in September. In November, as in October,

the U.S. foreign trade deficit was moderate; sizable in

flows of official funds from oil-exporting countries con

tinued, while other capital inflows and outflows reported

by banks were roughly offsetting.

The narrowly defined money stock grew at an annual

rate of 4 per cent over the fourth quarter of 1974, while

the more broadly defined measure of the stock grew at a

rate of nearly 7 per cent. In December and early January,

however, the narrowly defined money stock changed little.

Net inflows of consumer-type time and savings deposits

at banks slowed sharply in December, although they continued

to improve at nonbank thrift institutions; in early January

deposit inflows at banks picked up. Business demands for

short-term credit, both at banks and in the commercial

paper market, moderated further in December, while demands

in the long-term market remained strong. Over recent weeks

short-term market interest rates have declined substantially,

but yields on long-term securities have changed little, on

balance. Federal Reserve discount rates were reduced from

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7-3/4 to 7-1/4 per cent in early January, and on

January 20 the Board announced a reduction in reserve

requirements on demand deposits estimated to release

$1.1 billion in required reserves.

In light of the foregoing developments, it is the

policy of the Federal Open Market Committee, while

resisting inflationary pressures and working toward

equilibrium in the country's balance of payments, to

foster financial conditions conducive to cushioning

recessionary tendencies and stimulating economic recovery.

To implement this policy, while taking account of the

forthcoming Treasury financing, developments in domestic

and international financial markets, and the Board's action

on reserve requirements, the Committee seeks to achieve

bank reserve and money market conditions consistent with

more rapid growth in monetary aggregates over the months

ahead than has occurred in recent months.

By unanimous vote, Sections 271.4 and 271.6 of the

Committee's Rules Regarding the Availability of Information were

amended to read as follows, effective February 19, 1975:

Section 271.4--Records Available to the

Public on Request

(a) Records available.--Records of the Committee are made

available to any person, upon request, for inspection or

copying in accordance with the provisions of this section

and subject to the limitations stated in §§ 271.5 and 271.6.

Records falling within the exemptions from disclosure set

forth in section 522(b) of Title 5 of the United States

Code and in § 271.6 may nevertheless be made available in

accordance with this section to the fullest extent con

sistent, in the Committee's judgment, with the effective

performance of the Committee's statutory responsibilities and

with the avoidance of injury to a public or private interest

intended to be protected by such exemptions.

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(b) Place and time.--In general, the records of

the Committee are held in the custody of the Board,

but certain of such records, or copies thereof, are

held in the custody of one or more of the Federal

Reserve Banks. Any such records subject to this

section will be made available for inspection or

copying during regular business hours at the offices

of the Board in the Federal Reserve Building, 20th

and Constitution Avenue, Washington, D.C., 20551, or,

in certain instances as provided in paragraph (c) of

this section, at the offices of one or more designated

Federal Reserve Banks.

(c) Obtaining access to records.--Any person re

questing access to records of the Committee shall sub

mit such request in writing to the Secretary of the

Committee. In any case in which the records requested,

or copies thereof, are available at a Federal Reserve

Bank, the Secretary of the Committee may so advise the

person requesting access to the records. Every request

for access to records of the Committee shall state the

full name and address of the person requesting them and

shall describe such records in a manner reasonably suf

ficient to permit their identification without undue

difficulty. The Secretary of the Committee shall deter

mine within ten working days after receipt of a request

for access to records of the Committee whether to comply

with such request; and he shall immediately notify the

requesting party of his decision, of the reasons therefor,

and of the right of the requesting party to appeal to

the Committee any refusal to make available the requested

records of the Committee.

(d) Appeal of denial of access to records of the

Committee.--Any person who is denied access to records

of the Committee, properly requested in accordance with

paragraph (c) of this section, may file, with the

Secretary of the Committee, within ten days of notifi

cation of such denial, a written request for review of

such denial. The Committee, or such member or members

as the Committee may designate (pursuant to section

272.4(c) of its Rules of Procedure), shall make a deter

mination with respect to any such appeal within 20

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working days of its receipt, and shall immediately

notify the appealing party of the decision on the

appeal and of the right to seek court review of any

decision which upholds, in whole or in part, the re

fusal of the Secretary of the Committee to make

available the requested records.

(e) Extension of time requirements in unusual

circumstances.--In unusual circumstances as provided

in 5 U.S.C. § 552(a)(6)(b), the time limitations

imposed upon the Secretary of the Committee or the

Committee or its designated representative(s) in

paragraphs (c) and (d) of this section may be extended

by written notice to the requesting party for a period

of time not to exceed a total of ten working days.

*

*

*

Section 271.6--Information

Not Disclosed

Except as may be authorized by the Committee,

information of the Committee that is not available to

the public through other sources will not be published

or made available for inspection, examination, or

copying by any person if such information

(a) is exempted from disclosure by statute or

is specifically authorized under criteria established

by an executive order to be kept secret in the interest

of national defense or foreign policy and is in fact

properly classified pursuant to such executive order;

(b) relates solely to internal personnel rules or

practices or other internal practices of the Committee;

(c) relates to trade secrets or commercial or

financial information obtained from any person and

privileged or confidential;

1/20-21/75

(d) is contained in inter-agency or intra-agency

memoranda or letters, including records of delibera

tions and discussions at meetings of the Committee and

reports and documents filed by members or staff of the

Committee that would not be routinely available to a

private party in litigation with the Committee;

(e) is contained in personnel, medical, or similar

files (including financial files) the disclosure of

which would constitute a clearly unwarranted invasion

of personal privacy; or

(f) is

operating,

of, or for

regulation

contained in or related to examination,

or condition reports prepared by, on behalf

the use of any agency responsible for the

or supervision of financial institutions.

Except as provided by or pursuant to this Part, no

person shall disclose, or permit the disclosure of,

any information of the Committee to any person,

whether by giving out or furnishing such information

or copy thereof, by allowing any person to inspect,

examine, or reproduce such information or copy there

of, or by any other means, whether the information is

located at the offices of the Board, any Federal Reserve

Bank, or elsewhere, unless such disclosure is required

in the performance of duties for, or pursuant to the

direction of, the Committee.

By unanimous vote, publication for comment in the Federal

Register of the following proposed uniform schedule of fees,

intended for incorporation in

the Committee's Rules Regarding the

Availability of Information, was authorized:

Fee Schedule.--A person requesting access to or

copies of particular records shall pay the costs of

searching and copying such records at the rate of

$10 per hour for searching and 10 cents per standard

page for copying. With respect to information obtain

able only by processing through a computer or other

1/20-21/75

-9

information systems program, a person requesting such

information shall pay a fee not to exceed the direct and

reasonable cost of retrieval and production of the infor

mation requested. Detailed schedules of such charges

are available upon request from the Secretary of the

Committee. Documents may be furnished without charge

or at a reduced charge where the Secretary of the

Committee or such person as he may designate determines

that waiver or reduction of the fee is in the public

interest because furnishing the information can be

considered as primarily benefiting the general public.

By unanimous vote, responsibility for making determina

tions with respect to appeals of denial of access to Committee

records, under the provisions of 271.4(d) of the Committee's

Rules Regarding Availability of Information, was delegated

to Mr. Holland, and in his absence, to Mr. Coldwell.

By unanimous vote, transfer to the National Archives of

the FOMC memoranda of discussion for 1969, on the basis described

in memoranda from the Secretariat dated January 13, 1975, was

authorized.

It was agreed that the next meeting of the Committee would

be held on Wednesday, February 19, 1975.

The meeting adjourned.

Secretary