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Meeting of Federal Open Market Committee June 19-20, 1972 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, June 19 and 20, 1972. The meeting began at 4:15 p.m. on Monday and continued at 9:30 a.m. on Tuesday. PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Burns, Chairman Brimmer Bucher Coldwell Daane Eastburn MacLaury Mitchell Robertson Sheehan Winn Treiber, Alternate for Mr. Hayes Messrs, Francis, Heflin, and Mayo, Alternate Members of the Federal Open Market Committee Messrs. Morris, Kimbrel, and Clay, Presidents of the Federal Reserve Banks of Boston, Atlanta, and Kansas City, respectively Mr. Holland, Secretary Mr. Broida, Deputy Secretary Messrs. Altmann and Bernard, Assistant Secretaries Mr. Hexter, Assistant General Counsel Mr. Partee, Senior Economist Mr. Axilrod, Economist (Domestic Finance) Mr. Solomon, Economist (International Finance) Messrs. Boehne, Bryant, Gramley, Green, Hersey, Hocter, and Kareken, Associate Economists 6/19-20/72 Mr. Holmes, Manager, System Open Market Account Mr. Coombs,1/ Special Manager, System Open Market Account Mr. Melnicoff, Deputy Executive Director, Board of Governors Mr. O'Brien, Special Assistant to the Board of Governor Mr. Sammons,- Associate Director, Division of International Finance, Board of Governors Messrs. Wernick and Williams, Advisers, Division of Research and Statistics, Board of Governors Mr. Gemmill, Adviser, Division of International Finance Board of Governors Mr. Zeisel,2 / Associate Adviser, Division of Research and Statistics, Board of Governors Miss Stockwell 2/ and Messrs. Ettin 2 / and Taylor,2/ Assistant Advisers, Division of Research and Statistics, Board of Governors Mrs. Junz,2/ Assistant Adviser, Division of Inter national Finance, Board of Governors Mr. Wendel, Chief, Government Finance Section, Division of Research and Statistics, Board of Governors Messrs. Enzler 2/and Peret,2/ Economist and Senior Economist, respectively, Division of Research and Statistics, Board of Governors Mr. Roxon,2/ Senior Economist, Division of International Finance, Board of Governors Miss Eaton, Open Market Secretariat Assistant, Office of he Secretary, Board of Governors Mrs. Rehanek,1/ Secretary, Office of the Secretary, Board of Governors Mr. Merritt, First Vice President, Federal Reserve Bank of San Francisco Messrs. Parthemos, Scheld, Andersen, Tow, and Craven, Senior Vice Presidents, Federal Reserve Banks of Richmond, Chicago, St. Louis, Kansas City, and San Francisco, respectively Mr. Bodner,2/ Vice President, Federal Reserve Bank of New York 1/ 2/ Attended Tuesday session only. Attended Monday session only. 6/19-20/72 -3 Mr. Garvy, Economic Adviser, Federal Reserve Bank of ew York Mr. Cooper,1/ Assistant Vice President, Federal Reserve Bank of New York Mr. Cox, Senior Financial Economist, Federal Reserve Bank of Atlanta Mr. McNees, Economist, Federal Reserve Bank of Boston Secretary's Note: All of the actions listed below were taken on Tuesday, June 20, 1972. By unanimous vote, the minutes of actions taken at the meeting of the Federal Open Market Committee on April 18, 1972, were approved. The memorandum of discussion for the meeting of the Federal Open Market Committee on April 18. 1972, was accepted. By unanimous vote, Thomas J. O'Connell was elected Assistant General Counsel of the Federal Open Market Committee,to serve for the period from July 1, 1972, until the date of the first meeting of the Committee after February 28, 1973, with the understanding that in the event of the discontinuance of his official connection with the Board of Governors he would cease to have any official connection with the Federal Open Market Committee. By unanimous vote, the System open market transactions in foreign currencies during the period May 23 through June 19, 1972, were approved, ratified, and confirmed. By unanimous vote, renewal for further periods of 3 months of the 4 System drawings on the National Bank of Belgium maturing in the period July 3-28, 1972 was authorized. 1/ Attended Tuesday session only. 6/20/72 By unanimous vote, the open market transactions in Government securities, agency obligations, and bankers' acceptances during the period May 23 through June 19, 1972, 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 current economic policy directive: The information reviewed at this meeting, including recent data for such measures of business activity as industrial production, employment, and retail sales, sug gests that real output of goods and services is growing at a faster rate in the current quarter than in the two preceding quarters, but the unemployment rate remains high. In May wholesale prices of farm and food products advanced appreciably--after having changed little in April--and the rise in prices of industrial commodities remained substantial. The most recent data suggest some moderation in the pace of advance in wage rates. The U.S. balance of payments has been in surplus in recent weeks on both the official settlements basis and the net liquidity basis. In April, however, the excess of mer chandise imports over exports was even larger than in February and March. Some strains have developed in international financial markets recently, involving European currencies. Growth in the narrowly defined money stock slowed further in May, while growth in the broadly defined money stock stepped up somewhat as inflows of consumer type time and savings deposits to banks expanded con siderably; over the April-May period, growth in both measures of the money stock was well below the high rates in the first quarter of the year. The outstanding volume of large-denomination CD's increased substantially further in May, and expansion in the bank credit proxy remained rapid. In recent weeks, market interest rates have con tinued to fluctuate in a narrow range. 6/20/72 In light of the foregoing developments, it is the policy of the Federal Open Market Committee to foster financial con ditions conducive to sustainable real economic growth and increased employment, abatement of inflationary pressures, and attainment of reasonable equilibrium in the country's balance of payments. To implement this policy, while taking account of pos sible Treasury financing and developments in capital markets, the Committee seeks to achieve bank reserve and money market conditions that will support moderate growth in monetary aggregates over the months ahead. It was agreed that the next meeting of the Federal Open Market Committee would be held on Tuesday, July 18, 1972, at 9:30 a.m. The meeting adjourned. Secretary
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