FOMC Minutes

Meeting of Federal Open Market Committee

July 15, 1982

MINUTES OF ACTIONS

A meeting of the Federal Open Market Committee was held on

Thursday, July 15, 1982.

This was a telephone conference meeting, and

each individual was in Washington, D. C., except as otherwise indicated

in parentheses in the following list of those participating.

PRESENT:

Mr. Volcker, Chairman

Mr. Solomon, Vice Chairman

Mr. Balles

Mr. Black

Mr. Ford

Mrs. Horn

Mr. Martin

Mr. Partee

Mrs. Teeters

(New York)

(San Francisco)

(Richmond)

(Atlanta)

(Cleveland)

Messrs. Guffey (Kansas City), Keehn (Chicago), Roos (St. Louis),

and Timlen (New York), Alternate Members of the Federal

Open Market Committee

Messrs. Boehne (Philadelphia), Boykin (Dallas), and Corrigan

(Minneapolis), Presidents of the Federal Reserve Banks

of Philadelphia, Dallas, and Minneapolis, respectively

Mr. Axilrod, Staff Director

Mr. Altmann, Secretary

Mr. Bernard, Assistant Secretary

Mrs. Steele, Deputy Assistant Secretary

Mr. Bradfield, General Counsel

Mr. Oltman (New York), Deputy General Counsel

Mr. Kichline, Economist

Messrs. J. Davis (Cleveland), Keran (San Francisco), Koch

(Atlanta), Prell, Siegman, and Zeisel, Associate

Economists

Mr. Cross (New York), Manager for Foreign Operations,

System Open Market Account

Mr. Sternlight (New York), Manager for Domestic Operations,

System Open Market Account

7/15/82

Mr. Coyne, Assistant to the Board of Governors

Mr. McIntosh (Boston), First Vice President, Federal

Reserve Bank of Boston

Messrs. T. Davis (Kansas City), Eisenmenger (Boston),

and Stern (Minneapolis), Senior Vice Presidents,

Federal Reserve Banks of Kansas City, Boston,

and Minneapolis, respectively

Messrs. Broaddus (Richmond), Burger (St. Louis),

Nichols (Chicago), and Soss, Vice Presidents,

Federal Reserve Banks of Richmond, St. Louis,

Chicago, and New York, respectively

Mr. Lang (Philadelphia), Research Officer, Federal

Reserve Bank of Philadelphia

Mr. Pearce (Dallas), Assistant Vice President, Federal

Reserve Bank of Dallas

With Mrs. Teeters dissenting, the Committee reaffirmed the following

ranges for growth of the monetary aggregates over the year from the fourth

quarter of 1981 to the fourth quarter of 1982 that it had adopted in early

February:

for M1, 2-1/2 to 5-1/2 percent; for M2, 6 to 9 percent; and for M3,

6-1/2 to 9-1/2 percent.

cent.

The associated range for bank credit was 6 to 9 per

At the same time, the Committee agreed that growth in the monetary and

credit aggregates around the top of the indicated ranges would be acceptable

in the light of the relatively low base period for the M1 target and other

factors, and that it would tolerate for some period of time growth somewhat

above the target range should unusual precautionary demands for for money

and liquidity be evident in the light of current economic uncertainties.

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7/15/82

By unanimous vote, the Committee indicated that for 1983 it

was tentatively planning to continue the current ranges for 1982, but

would review that decision carefully in the light of developments over

the remainder of 1982.

Secretary's note: Shortly afterwards, Messrs. Gramley, Rice,

and Wallich, who had been unable to attend this meeting but

who had been present for the main discussion of the longer-run

ranges for monetary growth held at the meeting on June 30

July 1, 1982, associated themselves with the Committee in its

actions with respect to the ranges for both 1982 and 1983.

Following the Committee's actions, the next to last paragraph of

the domestic policy directive adopted at its meeting on June 30-July 1 read

as follows:

The Federal Open Market Committee seeks to foster

monetary and financial conditions that will help to

reduce inflation, promote a resumption of growth in

output on a sustainable basis, and contribute to a

sustainable pattern of international transactions.

At its meeting in early February, the Committee had

agreed that its objectives would be furthered by

growth of M1, M2, and M3 from the fourth quarter of

1981 to the fourth quarter of 1982 within ranges of

2-1/2 to 5-1/2 percent, 6 to 9 percent, and 6-1/2 to

9-1/2 percent respectively. The associated range for

bank credit was 6 to 9 percent. The Committee began

a review of these ranges at its meeting on June 30

July 1, and at a meeting on July 15, it reaffirmed the

targets for the year set in February. At the same

time the Committee agreed that growth in the monetary

and credit aggregates around the top of the indicated

ranges would be acceptable in the light of the rela

tively low base period for the M1 target and other

factors, and that it would tolerate for some period

of time growth somewhat above the target range should

unusual precautionary demands for money and liquidity

be evident in the light of current economic uncertain

ties. The Committee also indicated it was tentatively

planning to continue the current ranges for 1983, but

would review that decision carefully in the light of

developments over the remainder of 1982.

7/15/82

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It was agreed that the next meeting of the Federal Open Market

Committee would be held on Tuesday, August 24, 1982, at 9:30 a.m.

The meeting adjourned.

Secretary