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FEDERAL OPEN MARKET COMMITTEE
CONFERENCE CALL
July 19, 1979
PRESENT:

Mr. Miller, Chairman
Mr. Volcker, Vice Chairman
Mr. Black
Mr. Coldwell
Mr. Rice
Ms. Teeters
Mr. Wallich
Messrs. Morris, Roos, and Winn, Alternate Members of the Federal Open
Market Committee
Messrs. Baughman, and Eastburn, Presidents of the Federal Reserve
Banks of Dallas, and Philadelphia respectively
Mr. Altmann, Secretary
Mr. Bernard, Assistant Secretary
Mr. Petersen, General Counsel
Mr. Mannion, Assistant General Counsel
Mr. Axilrod, Economist
Messrs. Kichline, Scheld, and Truman, Associate Economists
Ms. Greene, Assistant Manager for Foreign Operations, System Open Market
Account
Messrs. Czerwinki, Forrestal, Gainor, and Williams, First Vice Presidents,
Federal Reserve Banks of Kansas City, Atlanta, Minneapolis, and
San Francisco respectively

at, the upper end of the 9-3/4 to 10-1/2 percent funds rate range set
by the Committee. Personally, Mr. Chairman, I would recommend to the
Committee a 10-1/2 percent rate at this point. The aggregates are
right at the [tops] of the ranges--actually above in one case. The
funds rate averaged 10.35 percent last week and I believe there would
be little to gain by an effort to fine-tune it somewhere between
10-1/4 and 10-1/2 percent. That completes my report on the aggregates
and their relation to the directive, Mr. Chairman.
you on?
please?

CHAIRMAN MILLER. Thank you very much, Steve. Gretchen, are
Could we have your report on the foreign exchange market,
MS. GREENE.

Yes, I am.

CHAIRMAN MILLER.

Can you hear me?

We hear you fine here in San Francisco.

MS. GREENE. If I may, I'd like to bring the members of the
I
Committee up-to-date on the events since we last talked on Tuesday.
should say that following the news of Tuesday afternoon the dollar
came under intense pressure once again, primarily in the Far East on
Tuesday night. The magnitude of our intervention operations in that
market Tuesday night and a quick follow-up by the Bundesbank in
Frankfort the next morning impressed the market and helped to quell
some of the immediate pressure. Since that time the market has
technically been in better balance, but the environment and sentiment
continue to be extremely bearish for the dollar. Market participants,
commercial [firms], and investors are reporting that they are making a
hard reassessment of the dollar's prospects and the implication of
Even the promise offered a
those prospects for their own operations.
couple of weeks ago that a recession might help us on the inflation
front and on our trade account is a promise that is quickly fading
away. The one thing helping us in the past day or so has been the
expectation--[which] has been affirmed over the past hours--that the
heavy intervention the market has detected will soon be followed by
Parallels are being drawn between this
some other kind of package.
period and the period leading up to November 1 of last year.
In terms of our operations, the Desk has sold $450 million
worth of marks since we last spoke on Tuesday. This brings our
intervention since Sunday night to almost $1.2 billion, which has been
equally shared between the System and the Treasury. Since mid-June
the net intervention by the United States has been $3.6 billion. This
compares to the $4.1 billion from our 3 partners in the November 1
for Switzerland.
for Germany and
package-And we should not overlook, however, the contribution in terms of
official dollar purchases by the Bank of England of
during that period. Of the $3.6 billion of intervention we have done,
$1.5 billion has been on behalf of the System. That has been entirely
financed by swap drawings on the Bundesbank. The $2.1 billion done
for the Treasury has been financed largely out of balances the
Treasury had warehoused at the System. This brings the Treasury's
balance to more than a billion marks short of their liabilities under
the Carter bonds. That's all I have to report, Mr. Chairman.
CHAIRMAN MILLER. Thank you very much, Gretchen. Well,
ladies and gentlemen, it seems to me--since the growth of the
aggregates now appears to be over our upper limits--that we have a

7/19/79

-2-

condition where, in the absence of overriding instructions, the Desk
would follow the directive and move the fed funds rate up. I would
like to outline some possibilities for consideration and then go
around and get your reactions. One possibility is to [issue] no new
instructions. The Desk would therefore interpret the directive, as
Steve was suggesting, as meaning that the fed funds rate should be
moved up to 10-1/2 percent.
Let me say it this way instead. The first alternative is to
give overriding instructions to keep the fed funds rate where it is.
The second alternative is to let it go up [in accordance] with the
directive. The third alternative would be to let the fed funds go up
with the directive to 10-1/2 percent and very quickly move the
discount rate to, say, 10 or 10-1/4 percent to close the widening gap
between the discount rate and the fed funds rate. This would involve
some tightening and some signal, which would not be tremendously
dramatic. Another possibility is that we could believe that we not
only have aggregates problems but international or foreign exchange
market problems and perhaps we ought to take a more forceful action-move both the fed funds rate and the discount rate up further.
I am not at the moment sure what the [Committee's] sentiment
is.
My [inclination] is that the minimum we should do is to follow
the directive under these conditions. And should we do that, it seems
that a discount rate increase is likely because a 1 percent gap
[between the two rates] is very large and undoubtedly will be
misinterpreted unless we do something to [reduce that] margin. So
with those general comments, what I'd like to do is run through the
I'll start down the list I
list and see how you all feel about it.
have here; it may not be in accordance with roll call [order] but I'll
do my best. Paul Volcker.
VICE CHAIRMAN VOLCKER. I basically come out with your
intermediate position, Mr. Chairman, as a logical course. I could
rather easily be talked into your last position but I don't think we
should back down on the directive now. I don't think we should do a
I would think,
discount rate change without a fed funds rate change.
given the domestic and monetary and foreign exchange objectives, that
your intermediate proposal might be a reasonable position. But I
could be persuaded to do more.
I might add one other point. This question on the discount
rate came up this afternoon, as it always does at our directors'
meetings. There was some concern expressed, which I share, that for
this kind of action to be effective it shouldn't be a source of
controversy with the Administration; it should look like an integrated
economic policy. Perhaps recent events have taken care of that. But
I just mention that [taking] some Federal Reserve action and then
getting a lot of controversy about it may not be helpful, unless [the
action] were bigger than what I'm talking about.
CHAIRMAN MILLER. Paul, I think your comment is well taken.
If we are going to take any monetary action, it might be [useful] to
touch base with the Secretary of the Treasury and get it coordinated.
Bob Black.
Well, we will go back [to my list].

this.

MR. BLACK. Mr. Chairman, I lean toward the hawkish side on
I think we ought to put the fed funds rate up perhaps a half

7/19/79

point and move the discount rate up a full percentage point. And I'd
raise the fed funds rate range to, say, 10 to 11 percent or something
of that sort.
CHAIRMAN MILLER.

Thank you.

Phil Coldwell.

MR. COLDWELL. Mr. Chairman, as far as the Open Market
Committee's action, which is all I would like to comment on at the
moment, I would prefer that we move [in conformance] with the current
I'd reaffirm that directive and then have the Board take a
directive.
look at a discount action as [the requests] come in tomorrow.
CHAIRMAN MILLER. Phil, would you be seeking a discount rate
[action by] the Board tomorrow?
MR. COLDWELL. Well, I think we really need [a discussion
among the] Board members of whether the Board itself wishes to approve
any kind of discount rate action. If it does, then I'd try to seek a
broader action rather than just [act on the pending request of] one
Bank.
CHAIRMAN MILLER.

Thank you.

Emmett Rice.

MR. RICE. Mr. Chairman, I think we should stay with the
directive and that means to me that we should let the fed funds rate
go up to 10-1/2 percent in accordance with the suggestions that we
have heard. I guess this is the middle range recommendation. At this
I
time, I would not like to see an increase in the discount rate.
don't know if it's possible, in lieu of an increase in the discount
rate, to suggest to the Federal Reserve Banks that they make access to
the discount window less automatic. I don't know how feasible that
is.
I recognize that with the rise in the federal funds rate we
increase the spread between the discount rate and the funds rate and
thereby provide an additional incentive to the commercial banks to use
the discount window. I think that should be discouraged if at all
possible. Nevertheless, I would not want to discourage it by raising
the discount rate at this time. I would, however, like to see the
funds rate rise a quarter point. Thank you.
CHAIRMAN MILLER.

Thank you, Emmett.

Nancy Teeters.

MS. TEETERS. Mr. Chairman, I am opposed to changing [the
It seems to me, given the state of the underlying
funds rate].
domestic economy, that we are going to be raising the funds rate and
it's just going to be a matter of days until we have to turn around
I think we are better off riding out the
and pull it back down again.
international storm. Other things are in such a state of flux that it
would signal a supreme lack of confidence in what is going on here in
the city of Washington at the present time. I think we are better off
just staying still. That's all I have.
CHAIRMAN MILLER.

Okay, Nancy.

Henry Wallich.

MR. WALLICH. I see the need to move the funds rate on
The exchange markets have
account of the behavior of the aggregates.
not done anything immediately and visibly that would call for action
but I think there is accumulating malaise there and if we don't act,
we will probably see a move [in the dollar] and will have to take

7/19/79

costly counteraction. Putting those two things together, I would say:
Raise the funds rate by 1/4 percentage point, as per the directive;
move the discount rate up 1/2 percentage point; and urge the Treasury-as a sort of blessing to the action--to increase its sales of gold to
the old level.
CHAIRMAN MILLER.

Thank you, Henry.

Larry Roos.

MR. ROOS.
I would recommend that we follow the directive-let the fed funds rate move to 10-1/2 percent--and that we raise the
discount rate 1/2 point.
CHAIRMAN MILLER.

Thank you, Larry.

Willis Winn.

MR. WINN. Mr. Chairman, I urge that we follow the directive
and permit the funds rate to rise to 10-1/2 percent. And then I would
urge that we change the discount rate. In the announcement, however,
I would focus on the behavior of the aggregates. That gives us the
flexibility to back down in response, hopefully, to better behavior
[of the aggregates] and the underlying economic situation. But I
think we have to give some signals to the international markets if we
are going to stem this dollar inflow. We certainly can't peg [the
dollar]; we shouldn't peg it anyway. But we can't peg it, I think,
just by direct intervention with no signal or we are going to find
more funds flowing in than we can possibly handle.
CHAIRMAN MILLER.

Thank you, Willis.

Ernie Baughman.

MR. BAUGHMAN. Mr. Chairman, I think the minimum in the
circumstance should be a quarter point move in the funds rate and a
half point move in the discount rate. And I think Henry Wallich's
suggestion of something from the Treasury with respect to gold sales
would also provide a significant indication of the Administration's
support and participation.
CHAIRMAN MILLER.
MR. EASTBURN.

Thank you, Ernie.

Dave Eastburn.

My preference among the choices--

CHAIRMAN MILLER. Dave, we are not hearing you very well.
Before you comment, I hope you will [discuss your own preferences] and
not feel bound by the choices I talked about.
MR. EASTBURN. Well, I was just about to do so.
Can you hear
me now?
I was saying that my preference would be to do nothing at the
moment and wait a little while.
But if action is to be taken, I think
the appropriate move is to raise the discount rate. I say that
because I think that would be an effective signal internationally and
would follow the directive up.
I would announce it on the basis of
the dollar problem.
CHAIRMAN MILLER.

Thank you, Dave.

Frank Morris.

MR. MORRIS. Mr. Chairman, the amazing strength in the
aggregates has changed my position. I would be for an increase in the
funds rate to 10-1/2 or 10-5/8 percent and a move in the discount rate
to 10 percent.
I think Henry's idea of getting the Treasury to
announce simultaneously an increase in gold sales is a very good one.

7/19/79

CHAIRMAN MILLER.

I believe we have from

Thank you, Frank.

Kansas City Henry Czerwinski.

Henry, are you there?

MR. CZERWINSKI. Yes, Mr. Chairman. We would support an
increase in the federal funds rate to 10-1/2 percent. We also believe
that there should be an adjustment upward in the discount rate by at
least 1/2 percentage point on [the basis of the widening gap] but
there are other good reasons to boost the discount rate as well.
CHAIRMAN MILLER.

Bob Forrestall in

Thank you, Henry.

Atlanta.
MR. FORRESTAL. Yes, Mr. Chairman. In view of the
difficulties in the foreign exchange markets, coupled with the rise in
the money supply figures that were published, I believe that a quarter
percentage point increase in the federal funds rate would be
appropriate. We also would strongly support a discount rate increase
to 10 percent. The 10 percent rate can be justified on technical
grounds if none other, but there are certainly compelling reasons to
give a signal to the foreign exchange markets at this point.
CHAIRMAN MILLER.

Thank you, Bob.

Tom Gainor in Minneapolis.

MR. GAINOR. Mr. Chairman, for the reasons already stated we
would favor a 10 percent discount rate and a 10-1/2 percent fed funds
rate.
CHAIRMAN MILLER.
San Francisco.

I thank you, Tom.

John Williams here in

MR. WILLIAMS. Yes, I would agree with Tom Gainor that for
all the reasons stated we should go to 10-1/2 percent on fed funds and
move the discount rate up to 10 or 10-1/4 percent.
CHAIRMAN MILLER. Unless I counted wrong, I believe I've
covered all participants--Governors and either Presidents or First
Vice Presidents. Has anyone been omitted? My list seems to be
complete.
SPEAKER(?).
MR. SCHELD.
Karl Scheld.

You didn't hear from Chicago, Mr. Chairman.
Well, Mr. Mayo and Mr. Doyle are away.

CHAIRMAN MILLER.

Oh, fine.

This is

What would Chicago like to say?

MR. SCHIELD. The position hasn't changed here. We prefer to
stay with the directive, moving to 10-1/2 percent on the fed funds

rate and moving up 1/2 point on the discount rate.
CHAIRMAN MILLER. All right, I think that does it.
I'm sorry
I missed Chicago. In going back and recapping, it seems to me that
from the FOMC point of view the reaction was overwhelmingly to follow

the directive and go up to 10-1/2 percent on fed funds.

The sentiment

for perhaps going a little [beyond that] didn't seem to be supported
throughout the Committee. So, for FOMC purposes, assume that this is

a consultation and in the absence of alternative instructions we will

7/19/79

follow the directive and go to 10-1/2 percent. Let's put it this way.
Does anyone on the FOMC voting group dissent from that?
VICE CHAIRMAN VOLCKER. I don't dissent, Mr. Chairman, but it
could be interpreted, I suppose, consistent with the directive that
it's a rather firm 10-1/2 percent. In other words, 10-1/2 percent is
kind of a floor.
CHAIRMAN MILLER. I think the directive carries it to 10-1/2
percent, which is barely over what it is [now].
I don't think we'll
keep consulting. I don't mean to hedge it but a weak 10-1/2 or a
strong 10-1/2-VICE CHAIRMAN VOLCKER.
I'm happy.

Well, you are refining it anyway.

MR. MORRIS. We have had a very firm 10-1/4 percent, so it
seems to me that a firm 10-1/2 percent would be appropriate.
CHAIRMAN MILLER. On the matter of the discount rate, of
course, it is the prerogative of the Board of Governors to act on the
recommendation of one or more [Reserve Banks].
But I wanted to get
the sentiment of the FOMC because I think it bears on how we fall.
In
terms of the total System response on this telephone call, there seems
to be overwhelming support for moving to at least 10 percent on an
alignment basis or on the basis of [the monetary aggregates] or on the
basis of the international [situation] or for all three reasons.
However, I am not sure that sentiment showed up among the
Governors [as a group].
Phil didn't express [his view] and Henry did.
Nancy and Emmett said no change in the discount rate.
I'm not sure
where the Governors are coming out. We have to leave that in their
laps to decide in view of the discussions of the whole group and what
is going to [occur] once we have a 10-1/2 percent fed funds rate.
They will decide what is then appropriate. If, however, the Governors
begin to believe that an alignment is desirable, I think Phil's point
is well taken that we should try to make that a System-wide response
and give all the Banks as much chance as possible to be in on it.
I don't know what is [the best way to proceed].
I'd merely
suggest that the Governors talk about this among themselves and
perhaps I could call in the morning and see if there is anything that
I should be doing. I'll leave it to the Governors now, if they'd like
to give me any advice. Phil, do you have any suggestions?
MR. WALLICH. Bill, could I say that I think it's important
to get the two actions together, as far as the markets seeing them,
because they don't understand the reasons and the mechanics by which
we operate.
Perhaps we'd be able tonight to get the Presidents ready
to [catch] up with their boards of directors and have something ready
early tomorrow morning.
CHAIRMAN MILLER. Let's see. We have five Board members
[available today]; I'm here and four of you are there. Chuck is not
participating at the moment.
I guess he was not available. Henry, I
don't disagree with you. I think it's going to be very strange if we
have a 1 percentage point spread between the discount rate and the
federal funds rate; it will be misinterpreted. Nonetheless, it

7/19/79

depends upon what the Governors as a body want to do.
do you feel?

So, Phil, how

MR. COLDWELL. Mr. Chairman, may I suggest that after we
finish our FOMC discussion you call in and we could hold a brief Board
meeting?
CHAIRMAN MILLER.
MR. COLDWELL.

I think that would be a very good idea.

We could talk about it then.

CHAIRMAN MILLER. I am trying to sense whether you'd rather
do it now or in the morning, but I gather if the directors are
willing--.
Why don't we all get off this call and why don't you call
me back in San Francisco and we'll just pick up from here.
MR. ALTMANN. Mr. Chairman, this is Murray Altmann. When
this is concluded if you hang up and we disconnect the telephonic
system, I can get you back on just by calling the San Francisco line.
VICE CHAIRMAN VOLCKER. If I may just add a thought here:
The Treasury financing is coming up pretty soon. So that is a reason,
if there's going to be action, to get it done quickly.
MR. COLDWELL.

That's right.

VICE CHAIRMAN VOLCKER. I certainly agree with what Henry
says that the actions will reinforce each other psychologically to the
extent that they come together.
MR. COLDWELL.

There is one other point, Mr. Chairman.

Before-MR. BAUGHMAN. With the situation here, it seems to me that
it would be quite unfortunate if Reserve Bank directors were to send
in recommendations for increases in the discount rate now and they
were not approved.
MR. COLDWELL.

That was the reason we wanted to discuss it,

Ernie.
MR. BAUGHMAN. Tomorrow is Friday and we will need to get
going first thing in the morning to get-CHAIRMAN MILLER. I think the answer is that we should have a
conference of the Governors now. If we decide that we need to close
the spread, then we need to get back to you tonight, I think.
MR. COLDWELL.

Yes, I agree.

CHAIRMAN MILLER. That way we will act with some concert.
there anything else anyone would like to cover at this point?

Is

MR. COLDWELL. Mr. Chairman, this is Phil Coldwell.
I'd like
to suggest one thing. Perhaps the FOMC might wish to look at lifting
the ceiling on its fed funds range to allow the rate to go to 10-3/4
percent in the event things turn even more difficult.

7/19/79

CHAIRMAN MILLER. Well, I'm open to suggestions on that. Of
course, the next time we'll have a look at [new data on] the
aggregates will be a week from now. Are you suggesting, Phil, that
the range be changed now or changed [next week]?
MR. COLDWELL. Well, I don't think we have to have a vote to
change it if we just have an understanding of some leeway above the
10-1/2 percent if it became necessary for international purposes.
CHAIRMAN MILLER. If it becomes necessary for international
purposes, then I think we ought to poll the FOMC.
It seems like
somewhat of a blank check to say "go over 10-1/2 percent" without any
feeling based on the international situation. I'm not sure how the
Desk could respond to that. And I'm not sure the Chairman should give
instructions when he doesn't have the consensus of the Committee.
MR. COLDWELL.
I was trying to avoid a vote but if you wish
to take a vote on it, I would make the motion that we do so.
CHAIRMAN MILLER.
MR. COLDWELL.

Would you put any ceiling on it at all?

Yes, 10-3/4 percent.

CHAIRMAN MILLER. Well, I'll run down [the list]
there's any sentiment for that.
Paul?

and see if

VICE CHAIRMAN VOLCKER. I would be happy to do it but I don't
think it is necessary this afternoon.
CHAIRMAN MILLER.
MR. BLACK.

I would favor it, Mr. Chairman.

CHAIRMAN MILLER.
MR. COLDWELL.

Phil Coldwell?

Yes.

CHAIRMAN MILLER.
MR. RICE.

Bob Black?

Emmett Rice?

No, I would favor staying at 10-1/2 percent.

CHAIRMAN MILLER.
MS. TEETERS.

No, I would not change it.

CHAIRMAN MILLER.
MR. WALLICH.

Nancy Teeters?

Henry Wallich?

Yes, I'd go to a range with a 10-3/4 percent

ceiling.
CHAIRMAN MILLER.
MR. ROOS.

Larry Roos.

Yes sir, I would support it.

CHAIRMAN MILLER.

Willis Winn.

MR. WINN. I feel the way Paul does. I'm not sure it makes
that much difference, Mr. Chairman, but I can't oppose it.

-9-

7/19/79

CHAIRMAN MILLER. I believe we have only nine voting members
this afternoon and I think I've called on all the voting members.
We're missing an alternate for somebody; I don't know who it is.
Kansas City?
SPEAKER(?).

And Chuck Partee.

CHAIRMAN MILLER. Anyway, I was given a telex showing that 9
voting members, including myself, [would be on this call].
VICE CHAIRMAN VOLCKER. That's correct.
San Francisco President and his alternate.

You are missing the

CHAIRMAN MILLER. Okay, we are missing the alternate. That
means that the vote would be 1,2,3,4,5,6--not counting me--for an
increase in the range and 2 against; Emmett and Nancy would not do so.
That means that there is a majority to increase it and I'd be willing
I think we are going to have to consult before
to go along with that.
we move it much. Emmett and Nancy, could you go along with it so we
would have a unanimous vote?
MR. RICE. No, Mr. Chairman, I wouldn't want to go to 10-3/4
percent at this time.
CHAIRMAN MILLER. All right. Well, this isn't really a vote
to go to 10-3/4 percent; this is raising the range so that based on
Nancy?
further developments it could go there.
MS. TEETERS. Well, Paul sounds as if he is going to 10-3/4
percent. He wants a very firm 10-1/2 percent and that has usually
been 10 or 15 basis points above whatever the mark was. No, I can't
agree to go to 10-3/4 percent.
MR. RICE. Mr. Chairman, I understand that this is an
increase in the range, but if it becomes necessary--if developments in
markets change so dramatically that we feel we have to go to 10-3/4
percent--we will have a chance to do that in another meeting.
MR. STERNLIGHT. Mr. Chairman, Peter Sternlight. May I just
interject? With respect to any possible implementation of that
increased upper end of the range, I think there is the Treasury
financing to consider. If you were looking at doing something a week
from now, that would be right in the midst of the Treasury auction.
CHAIRMAN MILLER. I think that's right, Peter. And, as I
say, I'm not sure that this is necessary. We won't have any new data
until next week and we'll be in the [midst of the Treasury] financing.
Plus I think we more or less have to consult about these things.
Nonetheless, the motion has been made. Unless it is withdrawn, it
I am not sure of any
looks as if there is a majority for it.
procedure other than to say, well, that's the will of the Committee.
You have heard the comments. Phil, are you still satisfied that we
should set this range even though we are [unintelligible]? Have you
had a problem?
MR. COLDWELL. Well, my reason for this, Mr. Chairman,
If it were
ultimately [relates to] what we do with the discount rate.
the sentiment of the full Board to go more than one half percentage

7/19/79

-10-

point on the discount rate, then we're stuck with a fed funds rate
below or equal to it. I just was trying to give us a little
flexibility in the event the Board decided on a discount rate change
of larger than a half point.
CHAIRMAN MILLER. Well, [if we were to] change the range, I
don't see that the Desk would do anything differently in the next 7
days regardless of what happens to the discount rate. The aggregates
are barely above their upper limits and that doesn't call for greater
movement [in the funds rate], absent some other directive. So I'm a
little confused by this process. But it is a democratic process, so
we'll do what the majority thinks is right.
MR. COLDWELL. Well, I sponsored the motion, Mr. Chairman,
and if there is a strong feeling of reservation on your part I'll
withdraw the motion. I just thought it gave us a bit more flexibility
rather than being at the ceiling [of the funds range] so early in the
intermeeting period.
CHAIRMAN MILLER. Well, let me say this, Phil. I appreciate
the reason and I appreciate the strong support here. But my tendency
is not to go off on these things without first having a quick phone
call so we can get everyone involved. I would hate to see us publish
an interim action right now with dissenting votes. It seems to me
that this is a time when we need to unify ourselves. For that reason
I am a little reluctant to see us take an action if we are not going
to use it, when we have two non-affirmative votes to be reported the
next time [the Policy Record is published].
It does not contribute to
our overall course of action, so as long as there are dissenters who
won't withdraw [their dissents], I would ask that the supporters
withdraw at the moment. Let's just leave it that we will be in touch
with everybody if this action is necessary. And tomorrow we will
start again.
MR. COLDWELL.

Well, I'll withdraw the motion, Mr. Chairman.

CHAIRMAN MILLER. Okay, then we will not take any formal
action today. We merely had a consultation and then proceeded with
implementing the [current] directive. Peter Sternlight, I assume you
will be [implementing this] tomorrow?
MR. STERNLIGHT. That's right, Mr. Chairman. Funds were at a
10.40 percent average today. I don't think there will be any great
problem.
CHAIRMAN MILLER.
guidance, Peter?
MR. STERNLIGHT.

Do you need any further instructions or
I don't think so.

CHAIRMAN MILLER. All right. If there are no other comments
or suggestions, then I'll ask Murray to close off this session and
then I'll wait for your return call.
MR. ROOS. Mr. Chairman, do you want us to wait at this line
or will you call us in the morning or what?

7/19/79

-11-

CHAIRMAN MILLER. I think the decision was made that we'll
all hang up now and the Governors will stay in the Board Room. Murray
will call me back in San Francisco and we will have a Board of
Governors session.
MR. ROOS.

Are you coming back to the Presidents?

MR. COLDWELL.
MR. WINN.
home after 9:30?

Yes.

Murray, this is Willis Winn.

CHAIRMAN MILLER.

Will you call me at

Oh, I'm sorry, the Presidents--

MR. ALTMANN. I think the question is whether the Presidents
should stand by. We can get back to you after the Board has
consulted. I don't know how long that will take, perhaps not too
long.
CHAIRMAN MILLER.
MR. COLDWELL.

It won't take more than 15 minutes.

No.

MR. ALTMANN. So if the Presidents will stand by in their
conference rooms, I can call you back. Do you want to say something,
Steve?
MR. AXILROD. Mr. Chairman, I would just like to call to the
Committee's attention--I don't believe it requires any action at this
point--that there is an intermeeting limit on foreign exchange market
operations set by the Committee. That limit is $1-1/2 billion and
there is $877 million leeway left under that limit. It doesn't
require any action today but since the issue was mentioned last week,
I wanted to alert the Committee to the possibility that a telegram
might be forthcoming in a few days if more intervention of size is
required.
CHAIRMAN MILLER. Very good point, Steve. Any further
comments? The suggestion is that if the Presidents would continue to
be available for the next half hour at their own offices, we will be
able to get back to them and tell them the sentiment among the
Governors. Any other comments or other questions?
VICE CHAIRMAN VOLCKER.
for punishment, Mr. Chairman!
CHAIRMAN MILLER.

Meanwhile, I think you are a glutton

Well, there are those who say I'm crazy

but-VICE CHAIRMAN VOLCKER.
CHAIRMAN MILLER.

I don't think that.

Good luck.

Thank you.

MR. ALTMANN. Mr. Chairman, this is Murray Altmann. If
everyone would take the next call in their conference rooms, we can
get everybody on the same circuit. So I would ask you to be present
in the conference room.

7/19/79

-12-

CHAIRMAN MILLER.
MR. ALTMANN.

Now you would like us to hang up.

Yes, sir.

CHAIRMAN MILLER.

We are hanging up.
END OF SESSION


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