FOMC Minutes

Meeting of Federal Open Market Committee

November 16, 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.,

1976,

on Tuesday, November 16,

at 9:30 a.m.

PRESENT:

Mr. Burns, Chairman

Mr. Volcker, Vice Chairman

Mr. Black

Mr. Coldwell

Mr. Gardner

Mr. Jackson

Mr. Kimbrel

Mr. Lilly

Mr. Par tee

Mr. Wallich

Mr. Winn

Mr. 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, Davis, Kichline, Reynolds,

and Zeisel, Associate Economists

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Mr. Pardee, Deputy Manager for Foreign

Operations

Mr. Sternlight, Deputy Manager for

Domestic Operations

Messrs. Coyne and Keir, Assistants to

the Board of Governors

Mr. Gemmill, 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, Boehne, Scheld, and

Sims, Senior Vice Presidents,

Federal Reserve Banks of St. Louis,

Philadelphia, Chicago, and San

Francisco, respectively

Messrs. Burns, Davis, and Snellings,

Vice Presidents, Federal Reserve

Banks of Dallas, Kansas City, and

Richmond, respectively

Mr. McNees, Assistant Vice President,

Federal Reserve Bank of Boston

Mr. Kareken, Economic Adviser, Federal

Reserve Bank of Minneapolis

Mr. Hall, Economist, Federal Reserve

Bank of Cleveland

Mr. Meek, Monetary Adviser, Federal

Reserve Bank of New York

By unanimous vote, the minutes of actions taken at the

meetings of the Federal Open Market Committee held on October 19

and November 8, 1976, were approved.

11/16/76

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The report of examination of the System Open Market

Account, made by the Board's Division of Federal Reserve Bank

Examinations and Budgets as of the close of business August 20,

1976, was accepted.

By unanimous vote, the System Open Market transactions in

foreign currencies during the period October 19 through November 15,

1976, were approved, ratified, and confirmed.

By unanimous vote, System open market transactions in

Government securities, agency obligations, and bankers'

acceptances

during the period October 19 through November 15, 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 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 in

the fourth quarter may be falling somewhat below the

third-quarter rate. In October retail sales increased

little

following a decrease in September.

Industrial

production and employment in manufacturing declined,

in part because of strikes. After adjustment for

strikes, total payroll employment in nonfarm establish

ments rose somewhat further. According to household

survey data, the unemployment rate edged up from 7.8

to 7.9 per cent. The wholesale price index for all

commodities rose less rapidly in October than in

September as average prices of farm products and foods

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11/16/76

declined; however, average prices of industrial com

modities rose sharply further.

The advance in the

index of average wage rates over recent months has

remained somewhat below the rapid rate of increase

during 1975.

The average value of the dollar against leading

foreign currencies has remained steady in recent weeks,

declining slightly against the German mark and associated

European currencies but rising against the pound sterling

and the lira.

In September the U. S. foreign trade

deficit widened again, and the third-quarter deficit was

about double the average of the first

two quarters of 1976.

M1, which was about unchanged in September, expanded

sharply in October.

Growth in M2 and M3 accelerated as

inflows of the time and savings deposits included in these

broader aggregates continued exceptionally strong.

Interest

rates have fluctuated in a narrow range in recent weeks.

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 expansion, while resisting inflationary pres

sures and contributing to a sustainable pattern of inter

national 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

begin on December 20 and continue on December 21, 1976.

The meeting adjourned.

Secretary