FOMC Minutes

8/17/76

Meeting of Federal Open Market Committee

August 17, 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, August 17,

1976, at 9:30 a.m.

PRESENT:

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Burns, Chairman

Volcker, Vice Chairman

Black

Coldwell

Gardner

Jackson

Kimbrel

Lilly

Partee

Wallich

Winn

Guffey, Alternate for Mr. Balles

Messrs. Baughman, Mayo, and Morris,

Alternate Members of the Federal

Open Market Committee

Messrs. MacLaury, Eastburn, and Roos, Presidents

of the Federal Reserve Banks of Minneapolis,

Philadelphia, and St. Louis, respectively

Mr. Broida, Secretary

Mr. Altmann, Deputy Secretary

Mr. Bernard, Assistant Secretary

Mr. O'Connell, General Counsel

Mr. Axilrod, Economist (Domestic Finance)

Mr. Gramley, Economist (Domestic Business)

Messrs. Brandt, Keran, Kichline, Parthemos,

and Reynolds, Associate Economists

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8/17/76

Mr. Holmes, Manager, System Open Market

Account

Mr. Pardee, Deputy Manager for Foreign

Operations

Mr. Coyne, Assistant to the Board of

Governors

Mr. Keir, Assistant to the Board of

Governors

Mr. Pizer, Adviser, Division of International

Finance, Board of Governors

Mrs. Farar, Economist, Open Market

Secretariat, Board of Governors

Mrs. Deck, Staff Assistant, Open Market

Secretariat, Board of Governors

Mr. Williams, First Vice President,

Federal Reserve Bank of San Francisco

Messrs. Balbach, Doll, and Eisenmenger,

Senior Vice Presidents, Federal

Reserve Banks of St. Louis, Kansas

City, and Boston respectively

Mr. Green and Kaminow, Vice Presidents,

Federal Reserve Banks of Dallas and

Philadelphia respectively

Mr. Meek, Monetary Adviser, Federal

Reserve Bank of New York

Messrs. Fousek, Kareken, and Mrs. Nichols,

Economic Advisers, Federal Reserve

Banks of New York, Minneapolis, and

Chicago respectively

Mr. Hall, Economist and Director of Domestic

Finance, Federal Reserve Bank of Cleveland

Mr. Ozog, Manager, Acceptances and

Securities Departments, 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 July 19-20,

1976 were approved.

8/17/76

By unanimous vote, the System open market transactions in

foreign currencies during the period July 20 through August 16, 1976,

were approved, ratified, and confirmed.

By unanimous vote, System open market transactions in

Government securities, agency obligations, and bankers' acceptances

during the period July 20 through August 16, 1976, 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 growth in real output of goods and services is

remaining moderate in the current quarter. In July

industrial production changed little, but total employ

ment expanded by a substantial amount. The civilian

labor force also increased sharply, and the unemployment

rate rose from 7.5 to 7.8 per cent. Retail sales declined

in July, following the rebound in June. The rise in the

wholesale price index for all commodities remained moder

ate, as average prices of farm products and foods declined.

However, average prices of industrial commodities rose

more than in other recent months. So far this year the

advance in the index of average wage rates has been some

what below the rapid rate of increase during 1975.

The average value of the dollar against leading

foreign currencies has remained relatively steady in

recent weeks, despite some disturbances in exchange

markets for European currencies. In June the U. S. foreign

trade deficit increased, but the deficit for the second

quarter as a whole was somewhat smaller than that for the

first quarter.

8/17/76

M1, which had declined slightly in June, expanded

Inflows of the time and savings

appreciably in July.

deposits included in the broader aggregates were con

siderably stronger than in June, and growth in M2 and

M3 was rapid. Market interest rates have declined some

what further in recent weeks.

In light of.the foregoing devlopments, it is the

policy of the Federal Open Market Committee to foster

financial conditions that will encourage continued

economic expansion, 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 maintain prevailing

bank reserve and money market conditions over the

period immediately ahead, provided that monetary

aggregates appear to be growing at about the rates

currently expected.

It was agreed that the next meeting of the Committee would

be held on September 21, 1976, at 9:30 a.m.

The meeting adjourned.