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Meeting of Federal Open Market Committee November 20-21, 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, November 20 and 21, 1972. The meeting began at 2:30 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 Hayes, Vice Chairman Brimmer Bucher Daane Eastburn MacLaury Mitchell Robertson Sheehan Winn Francis, Alternate for Mr. Coldwell Messrs. Heflin and Mayo, Alternate Members of the Federal Open Market Committee Messrs. Morris, Kimbrel, Clay, and Balles, Presidents of the Federal Reserve Banks of Boston, Atlanta, Kansas City, and San Francisco, respectively Mr. Holland, Secretary Mr. Broida, Deputy Secretary Messrs. Altmann and Bernard, Assistant Secretaries Mr. Hackley, General Counsel Mr. O'Connell, Assistant General Counsel 11/20-21/72 Mr. Partee, Senior Economist Mr. Axilrod, Economist (Domestic Finance) Messrs. Boehne, Bryant, Gramley, Green, Hersey, Hocter, and Kareken, Associate Economists Mr; Holmes, Manager, System Open Market Account Mr. Coombs, Special Manager, System Open Market Account Mr. Melnicoff, Deputy Executive Director, Board of Governors Messrs. Coyne and O'Brien, Special Assistants to the Board of Governors Mr. Reynolds1/, Associate Director, Division of International Finance, Board of Governors Messrs. Keir, Pierce, Wernick, and Williams, Advisers, Division of Research and Statistics, Board of Governors Mr. Pizer, Adviser, Division of International Finance Board of Governors Mr. Zeisel 2/Associate Adviser, Division of Research and Statistics, Board of Governors 2/, Assistant Director, Office of Mr. Grimwood Executive Director, Board of Governors Assistant Director, Division of Mr. Ring 2/, Federal Reserve Bank Operations, Board of Governors 2/ 2/ Miss Stockwel 2/ and Mr. Taylor-- Assistant Advisers, Division of Research and Statistics, Board of Governors Mrs. Junz 2/,Assistant Adviser, Division of International Finance, Board of Governors Mr. Wendel, Chief, Government Finance Section, Division of Research and Statistics, Board of Governors Messrs. Peret2/ and Wetzel2/, Senior Economists, Division of Research and Statistics, Board of Governors and Wyss 2/, Economists, Division 2/ Messrs. Enzler of Research and Statistics, Board of Governors Miss Morrissee 2 / and Mr. Promisel 2/, Economists, Division of International Finance, Board of Governors 1/ 2/ Attended Tuesday session only. Attended part or all of Monday session only. 11/20-21/72 Mrs. Sherman, Secretary, Office of the Secretary, Board of Governors Mrs. Stanier 1/, Secretary, Office of the Secretary, Board of Governors Mr. Plant, First Vice President, Federal Reserve Bank of Dallas Messrs. Eisenmenger, Parthemos, Taylor, Scheld, Andersen, and Craven, Senior Vice Presidents, Federal Reserve Banks of Boston, Richmond, Atlanta, Chicago, St. Louis, and San Francisco, respectively Mr. Doll, Vice President, Federal Reserve Bank of Kansas City Mr. Garvy, Economic Adviser, Federal Reserve Bank of New York Mr. Cooper1/, Assistant Vice Presidents, Federal Reserve Bank of New York Secretary's note: All of the actions listed below were taken on Tuesday, November 21, 1972. By unanimous vote, the minutes of actions taken at the meetings of the Federal Open Market Committee on September 19 and October 17, 1972, were approved. The memoranda of discussion for the meetings of the Federal Open Market Committee on September 19 and October 17, 1972, were accepted. By unanimous vote, the System open market transactions in foreign currencies during the period October 17 through November 20, 1972, were approved, ratified, and confirmed. 1/ Attended Tuesday session only. 11/20-21/72 By unanimous vote, the Committee approved the renewal, for periods of up to one year, of the following swap arrangements having the indicated amounts and maturity dates: Foreign bank Amount of arrangement (millions of dollars equivalent) Austrian National Bank 200 National Bank of Belgium 600 Bank of Canada 1,000 National Bank of Denmark 200 2,000 Bank of England 1,000 Bank of France 1,000 German Federal Bank Bank of Italy 1,250 Bank of Japan 1,000 Bank of Mexico 130 Netherlands Bank 300 200 Bank of Norway 250 Bank of Sweden Swiss National Bank 1,000 Bank for International Settlements: Dollars against 600 Swiss francs Dollars against other authorized European 1,000 currencies Term (months) Maturity date December December December December December December December December December December December December December December 1972 1972 1972 1972 1972 1972 1972 1972 1972 1972 1972 1972 1972 1972 12 December 1, 1972 12 December 1, 1972 By unanimous vote, the open market transactions in Government securities, agency obligations, and bankers' acceptances during the period October 17 through November 20, 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, 11/20-21/72 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 industrial production, employment, and retail sales, suggests that real output of goods and services is growing more rapidly in the current quarter than in the third quarter. However, the unemployment rate has remained substantial. The increase in wages has been larger in recent months than earlier this year. Consumer prices rose considerably in September, but the October rise in wholesale prices was small. In recent weeks, the current account deficit of the U.S. balance of payments has been offset in large part by capital inflows; while the reserves of Japan have increased substantially further, those of other industrial countries have changed little. In September the excess of U.S. merchandise imports over exports remained large. In October rates of growth in the monetary aggregates changed relatively little from preceding months, with expansion in the narrowly defined money stock again quite moderate. Since mid-October interest rates generally have declined. In light of the foregoing developments, it is the policy of the Federal Open Market Committee to foster financial conditions 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 the effects of recent bank regulatory changes, the Committee seeks to achieve bank reserve and money market conditions that will support more moderate growth in monetary aggre gates over the months ahead than recorded in the third quarter. It was agreed that the authorization for the lending of Government securities from the System Open Market Account should be retained at this time. 11/20-21/72 It was agreed that the next meeting of the Federal Open Market Committee would be held on Tuesday, December 19, 1972, at 9:30 a.m. The meeting adjourned. Secretary
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