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Meeting of Federal Open Market Committee November 18, 1975 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, November 18, 1975, at 9:00 a.m. PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Burns, Chairman Volcker, Vice Chairman Baughman Bucher Coldwell Eastburn Holland Jackson MacLaury Mayo Mitchell Wallich Messrs. Black and Winn, Alternate Members of the Federal Open Market Committee Messrs. Clay, Kimbrel, and Morris, Presidents of the Federal Reserve Banks of Kansas City, Atlanta, and Boston, respectively Mr. Broida, Secretary Mr. Altmann, Deputy Secretary Mr. Bernard, Assistant Secretary Mr. O'Connell, General Counsel Mr. Partee, Senior Economist Mr. Axilrod, Economist (Domestic Finance) Mr. Gramley, Economist (Domestic Business) Messrs. Boehne, Davis, Green, Kareken, Reynolds, and Scheld, Associate Economists 11/18/75 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 Mrs. Ferrell, Open Market Secretariat Assistant, Board of Governors Messrs. Leonard and Williams, First Vice Presidents, Federal Reserve Banks of St. Louis and San Francisco, respectively Messrs. Eisenmenger, Parthemos, and Doll, Senior Vice Presidents, Federal Reserve Banks of Boston, Richmond, and Kansas City, respectively Messrs. Hocter, Brandt, Balbach, and Keran, Vice Presidents, Federal Reserve Banks of Cleveland, Atlanta, St. Louis, and San Francisco, respectively Mr. Ozog, Manager, Securities and Acceptances Division, Federal Reserve Bank of New York By unanimous vote, the minutes of actions taken at the meeting of the Federal Open Market Committee on October 21, 1975, were approved. 11/18/75 By unanimous vote, the System open market transactions in foreign currencies during the period October 21 through November 17, 1975, were approved, ratified, and confirmed. By unanimous vote, the Committee approved the renewal for further periods of up to one year of the following swap arrange ments, having the indicated amounts and maturity dates: Foreign bank Amount of arrangement (millions of dollars equivalent) Austrian National Bank 250 National Bank of Belgium 1,000 2,000 Bank of Canada 250 National Bank of Denmark Bank of England 3,000 2,000 Bank of France German Federal Bank 2,000 Bank of Italy 3,000 2,000 Bank of Japan Bank of Mexico 360 Netherlands Bank 500 250 Bank of Norway Bank of Sweden 300 1,400 Swiss National Bank Bank for International Settlements: Dollars against Swiss francs 600 Dollars against other authorized European currencies 1,250 Term (months) Maturity date 1975 1975 1975 1975 1975 1975 1975 1975 1975 1975 1975 1975 1975 1975 December December December December December December December December December December December December December December December 3, 1975 December 3, 1975 11/18/75 By unanimous vote, the open market transactions in Government securities, agency obligations, and bankers' acceptances during the period October 21 through November 17, 1975, were approved, ratified, and confirmed. With Messrs. Volcker, Eastburn, and Jackson dissenting, 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 output of goods and services--which had increased sharply in the third quarter--is expanding more moderately in the current quarter. Retail sales are reported to have risen in October, after 2 months of little net change. Industrial production and nonfarm payroll employment con tinued to recover, although at a less rapid rate than in the summer months. The unemployment rate rose to 8.6 per cent from 8.3 per cent in September, reflecting a sizable increase in the civilian labor force. Average wholesale prices of industrial commodities increased more in October than in the immediately preceding months, and prices of farm and food products rose sharply further. However, since mid-October prices of many agricultural products have declined. The advance in average wage rates in October was substantial. Since mid-October the exchange value of the dollar against leading foreign currencies has moved in a narrow range. The U.S. foreign trade surplus in September remained substantial, as both exports and imports rose moderately. Bank-reported private capital flows appear to have shifted to net outflows since September, and the volume of offerings of new foreign bonds in the U.S. market has been at record levels. 11/18/75 M1 rose at a 6.9 per cent annual rate from the average level during the second quarter to the average level during the third quarter. However, M1 grew rela tively little in the months of the third quarter and it declined in October. Inflows of consumer-type time and savings deposits to banks and to nonbank thrift institu tions remained moderate in October, and growth in M 2 and M3 slowed further. Most short- and long-term interest rates have declined further in recent weeks. Conditions in markets for State and local government securities have continued to be adversely affected by New York's financial problems. 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 more than usual account of developments in domestic and interna tional financial markets, the Committee seeks to achieve bank reserve and money market conditions consistent with moderate growth in monetary aggregates over the months ahead. It was agreed that the next meeting of the Committee would be held on December 16, 1975, at 9:00 a.m. The meeting adjourned. Secretary
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