FOMC Minutes

Meeting of

Federal Open Market Committee

April 14-15,

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, April 14 and 15,

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

PRESENT:

Mr.

Mr.

Burns,

Hayes,

Chairman

Vice Chairman

Mr.

Baughman

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Bucher 1/

Coldwell

Eastburn

Holland

MacLaury

Mayo

Mitchell

Wallich

Messrs. Balles, Black, Francis, and Winn,

Alternate Members of the Federal Open

Market Committee

Messrs. Clay, Kimbrel, and Morris,

Presidents of the Federal Reserve Banks

of Kansas City, Atlanta, and Boston,

respectively

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

1/

2/

Broida, Secretary

Altmann, Deputy Secretary

Bernard, Assistant Secretary

O'Connell, General Counsel

Guy, 2/ Deputy General Counsel

Partee, Senior Economist

Axilrod, Economist (Domestic Finance)

Left meeting at point indicated.

Attended Tuesday session only.

4/14-15/75

Mr. Gramley, Economist (Domestic Business)

Mr. Solomon, Economist (International Finance)

Messrs. Boehne, Bryant, Davis, Green, Kareken,

Pierce,1 / Reynolds, and Scheld, Associate

Economists

Mr. Sternlight, Deputy Manager for Domestic

Operations

Mr. Pardee, Deputy Manager for Foreign

Operations

Mr.

Coyne, Assistant to the Board of

Governors

Mr.

Rippey,1/ Assistant to the Board of

Governors

Mr. Keir,2/ Adviser, Division of Research

and Statistics, Board of Governors

Mrs. Farar, Economist, Open Market Secretariat,

Board of Governors

Mrs. Ferrell, Open Market Secretariat Assistant,

Board of Governors

Messrs. Parthemos, Jordan, and Doll, Senior

Vice Presidents, Federal Reserve Banks of

Richmond, St. Louis, and Kansas City,

respectively

Messrs. Fieleke, Hocter, and Brandt, Vice

Presidents of Boston, Cleveland, and

Atlanta

Mr. Keran, Director of Research, Federal

Reserve Bank of San Francisco

Ms. Tschinkel, Manager, Securities Department,

Federal Reserve Bank of New York

Secretary's note: The actions listed immediately

below were taken on Monday, April 14, 1975.

By unanimous vote, the minutes of actions taken at the

meeting of the Federal Open Market Committee held on March 18, 1975,

were approved.

The memorandum of discussion for the meeting of the Federal

Open Market Committee held on February 19, 1975, was accepted.

1/

2/

Attended Monday session only.

Attended Tuesday session only.

4/14-15/75

Secretary's note: All of the actions listed below

were taken on Tuesday, April 15, 1975.

By unanimous vote, the System open market transactions in

foreign currencies during the period March 18 through April 14, 1975,

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 5 through 14, 1975, was authorized.

By unanimous vote, the System open market transactions in

Government securities, agency obligations, and bankers acceptances,

during the period March 18 through April 14, 1975, were approved,

ratified, and confirmed.

Mr. Bucher left the meeting prior to the following action.

With Mr. Eastburn 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 fell sharply in

the first quarter. However, retail sales strengthened

during the quarter, and the rate of decline in over-all

activity has slowed in recent weeks. In March industrial

production and employment declined less than they had on

average in the preceding 4 months, but the unemployment

rate increased from 8.2 to 8.7 per cent, as the civilian

labor force grew. Average wholesale prices of industrial

4/14-15/75

commodities rose little in March and prices of farm and

food products declined sharply. The advance in average

wage rates during the first quarter was large, but it

was still below the increases of last spring and summer.

The prospect of an upturn in economic activity has

been strengthened by enactment of the Tax Reduction Act

of 1975, which will be adding soon to growth in dispos

able personal income.

The foreign exchange value of the dollar has risen

since early March, as short-term interest rates abroad

have declined further and market attitudes toward the

dollar have continued to improve. In January-February

the U.S. foreign trade balance was in surplus, as agri

cultural exports reached a new high and the volume of

imports other than fuels declined. Net outflows of

funds through banks continued large in February but

appear to have diminished in March. In early April

reserve requirements on foreign borrowings by member

banks were reduced from 8 to 4 per cent.

The narrowly defined money stock rose moderately

on balance over the first quarter, while broader mea

sures of the money stock expanded more rapidly. Growth

was substantial in March, apparently in part because of

the effects of accelerated tax refunds on deposits at

banks and nonbank thrift institutions. Business demands

for short-term credit remained weak, both at banks and

in the commercial paper market, while demands in the

long-term market continued exceptionally strong. Since

mid-March short-term market interest rates have increased

somewhat and longer-term yields have risen considerably

further.

In light of the foregoing developments, it is the

policy of the Federal Open Market Committee to foster

financial conditions conducive to stimulating economic

recovery, while resisting inflationary pressures and

working toward equilibrium in the country's balance of

payments.

4/14- 15/75

To implement this policy, while taking account of

the forthcoming Treasury financing and of developments

in domestic and international financial markets, the

Committee seeks to achieve bank reserve and money market

conditions consistent with somewhat more rapid growth in

monetary aggregates over the months ahead than has occurred

on average in recent months.

It was agreed that the authorization for the lending of

Government securities from the System Open Market Account, contained

in paragraph 3 of the Authorization for Domestic Open Market Opera

tions, should be retained at this time, subject to annual review.

By unanimous vote, the Committee approved the changes in

the terms and conditions for lending securities from the System

Open Market Account recommended by the Manager in a memorandum

dated March 7, 1975.

It was agreed that the next meeting of the Committee would

be held on Tuesday, May 20, 1975.

The meeting adjourned.

Secretary