March 18, 1975 FOMC Record of Policy Actions

FOMC minutes

In light of the foregoing developments, it is the policy of the Federal Open Market Committee to foster financial conditions conducive to stimulating economic recovery, while resisting inflationary pressures and working toward equilibrium in the country's balance of payments. To implement this policy, while taking account of developments in domestic and international finan cial markets, the Committee seeks to achieve bank reserve and money market conditions consistent with more rapid growth in monetary aggregates over the months ahead than has occurred in recent months. Votes for this action: Messrs. Burns, Hayes, Baughman, Coldwell, Holland, MacLaury, Mayo, Mitchell, and Wallich, Votes against this action: Messrs. Bucher, Eastburn, and Sheehan, Eastburn, and Sheehan dissented from Messrs. Bucher, that the economic situation this action because they believed and outlook together with recent slow growth in the monetary efforts in the near term called for more aggressive aggregates Committee's longer-run objectives for the aggre to achieve the favored higher upper limits on the gates. In particular, they of tolerance for the monetary aggregates and a 2-month ranges range for the Federal funds rate than lower inter-meeting adopted by the Committee. the meeting, on March 27, the available Subsequent to period the annual rates data suggested that in the March-April

in both M and M would be above the upper limits of of growth the ranges of tolerance that had been specified by the Committee. During the latest statement week the Federal funds rate had 5-1/2 per cent. In light of the behavior of the averaged about would, under normal cir the System Account Manager aggregates, have permitted the weekly average Federal funds rate cumstances, to rise to the upper limit of its range of tolerance--namely, cent. However, members of the Committee--with the 5-3/4 per exception of Mr. Sheehan--concurred in the Chairman's recommen dation of March 27 that, in view of the weakness in the economy and of the sensitive conditions in financial markets, particularly bond markets, the Manager be instructed to treat 5-1/2 per cent as the approximate upper limit for the weekly average funds rate for the time being. Mr. Sheehan did not concur because he believed in light of past shortfalls in monetary growth and of sensitive that, conditions in the bond market, the Committee should continue its easing posture by gradually reducing the funds rate. 2. Authorization for domestic open market operations On March 10 Committee members had voted to amend a provision of paragraph 2 of the authorization for domestic open market operations to raise from $1 billion to $2 billion the limit on System holdings of special short-term certificates of purchased directly from the Treasury. This action indebtedness

the recommendation of the Account Manager, had been taken on who had advised that he would recommend restoration of the $1 billion limit as soon as it appeared reasonable to do so. In view of the likelihood that the higher limit would be required over coming months, the Committee voted at from time to time today's meeting to maintain the limit at $2 billion for a period unless in the interim the Committee decided otherwise. of one year, Votes for this action: Messrs. Burns, Hayes, Baughman, Bucher, Coldwell, Eastburn, MacLaury, Mayo, Mitchell, Sheehan, and Wallich. Vote against this action: Mr. Holland, Mr. Holland dissented from this action because he pre ferred to tailor the ceiling more closely to changing needs on a month-to-month basis. 3, Review of continuing authorizations This being the first meeting of the Federal Open Market Committee following the election of new members from the Federal Reserve Banks to serve for the year beginning March 1, 1975, and their assumption of duties, the Committee followed its customary practice of reviewing all of its continuing authorizations and directives. The Committee reaffirmed the Authorization for Domestic Open Market Operations, the Authorization for Foreign Currency Operations, and the Foreign Currency Directive in the forms in which they were presently outstanding.

Messrs. these actions: Votes for Bucher, Hayes, Baughman, Burns, MacLaury, Holland, Eastburn, Coldwell, and Wallich. Sheehan, Mayo, Mitchell, None. these actions: Votes against