FOMC Minutes

Meeting of Federal Open Market Committee

April 20, 1976

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, April 20, 1976, at 9:00 a.m.

PRESENT:

Burns, Chairman

Volcker, Vice Chairman

Balles

Black

Coldwell

Gardner

Holland1/

Jackson

Kimbrel

Partee

Wallich

Winn

Messrs. Baughman, Guffey, Mayo, and Morris,

Alternate Members of the Federal Open Market

Committee

Messrs. Eastburn, MacLaury, and Roos, Presidents

of the Federal Reserve Banks of Philadelphia,

Minneapolis, 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. Axilrod, Economist (Domestic Finance)

Mr. Gramley, Economist (Domestic Business)

Messrs. Brandt, Hocter, Keran, Kichline,

Parthemos, Reynolds, and Zeisel,

Associate Economists

1/ Left meeting at point indicated.

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4/20/76

Mr. Holmes, Manager, System Open Market Account

Mr. Pardee, Deputy Manager for Foreign

Operations

Mr. Sternlight, Deputy Manager for Domestic

Operations

Mr. Coyne, Assistant to the Board of Governors

Mr. Keir, Adviser, Division of Research and

Statistics, Board of Governors

Mr. Gemmill, Adviser, Division of International

Finance, Board of Governors

Mrs. Farar, Economist, Open Market Secretariat,

Board of Governors

Miss Klaput, Secretary, Open Market Secretariat,

Board of Governors

Messrs. Boehne, Doll, Eisenmenger, and Scheld,

Senior Vice Presidents, Federal Reserve

Banks of Philadelphia, Kansas City, Boston,

and Chicago, respectively

Messrs. Balbach and Burns, Vice Presidents,

Federal Reserve Banks of St. Louis and

Dallas, respectively

Messrs. Fousek and Kareken, Economic Advisers,

Federal Reserve Banks of New York and

Minneapolis, respectively

Mr. Sandberg, Assistant Vice President, Federal

Reserve Bank of New York

By unanimous vote, the minutes of actions taken at the

meeting of the Federal Open Market Committee held on March 15-16,

1976, were approved.

By unanimous vote, System open market transactions in

foreign currencies during the period March 16 through April 19,

1976, were approved, ratified, and confirmed.

By unanimous vote, renewal for further periods of 3 months

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

National Bank, maturing on May 6 and May 13, 1976, was authorized.

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4/20/76

By unanimous vote, System open market transactions in

Government securities, agency obligations, and bankers' acceptances,

during the period March 16 through April 19, 1976, were approved,

ratified, and confirmed.

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

By unanimous vote, the Federal Reserve Bank of New York

was authorized and directed, until otherwise directed by the Com

mittee, to execute transactions in the System Account in accordance

with the following domestic policy directive:

The information reviewed at this meeting suggests

that growth in real output of goods and services picked

up in the first quarter. In March retail sales rose

sharply further and recovery in industrial production

continued. Gains in non-farm employment were again

widespread and the unemployment rate declined from 7.6

to 7.5 per cent. Over the first quarter wholesale prices

of farm products, foods, and fuels declined appreciably,

but average wholesale prices of other commodities rose

almost as rapidly as during the second half of 1975.

Over recent months, the advance in the index of average

wage rates has moderated somewhat.

The average value of the dollar against leading

foreign currencies has been relatively steady in recent

weeks, while the British pound and the Italian lira have

remained under considerable downward pressure. In

February the U.S. foreign trade balance registered a

second successive monthly deficit; reported net out

flows of private capital remained moderate.

Monetary aggregates expanded moderately in March.

At commercial banks, inflows of time and savings deposits

other than negotiable CD's fell substantially from the

exceptional pace of February; inflows to nonbank thrift

institutions remained strong. Since mid-March, both

short- and long-term market interest rates have declined.

4/20/76

In light of the foregoing developments, it is the

policy of the Federal Open Market Committee to foster

financial conditions that will encourage continued

economic recovery, while resisting inflationary pres

sures and contributing to a sustainable pattern of

international transactions.

To implement this policy, while taking account of

developments 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 period ahead.

It was agreed that the next meeting of the Committee

would be held on May 18, 1976.

The meeting adjourned.

Secretary