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Meeting of the Federal Open Market Committee November 12, 1997A 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 Wednesday, November 12, 1997,at 9:00 a.m.PRESENT: Mr. Greenspan, ChairmanMr. McDonough, Vice ChairmanMr. BroaddusMr. FergusonMr. GramlichMr. GuynnMr. KelleyMr. Meyer Mr. MoskowMr. ParryMs. PhillipsMs. RivlinMessrs. Hoenig, Jordan, Melzer, and Ms. Minehan, AlternateMembers of the Federal Open Market CommitteeMessrs. Boehne, McTeer, and Stern, Presidents of the FederalReserve Banks of Philadelphia, Dallas, and MinneapolisrespectivelyMr. Kohn, Secretary and EconomistMr. Bernard, Deputy SecretaryMr. Coyne, Assistant SecretaryMr. Gillum, Assistant SecretaryMr. Mattingly, General CounselMr. Baxter, Deputy General CounselMr. Prell, EconomistMr. Truman, EconomistMessrs. Cecchetti, Goodfriend, Eisenbeis, Lindsey, Promisel,Slifman, and Stockton, Associate EconomistsMr. Fisher, Manager, System Open Market Account
 
11/12/97
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 Messrs. Madigan and Simpson, Associate Directors, Divisions of Monetary Affairs and Research and Statistics respectively,Board of GovernorsMessrs. Alexander and Hooper, and Ms. Johnson, AssociateDirectors, Division of International Finance, Board of GovernorsMs. Low, Open Market Secretariat Assistant, Division of Monetary Affairs, Board of GovernorsMs. Pianalto and Mr. Rives, First Vice Presidents, Federal ReserveBanks of Cleveland and St. Louis respectivelyMessrs. Dewald, Hakkio, Rolnick, and Sniderman, Senior VicePresidents, Federal Reserve Banks of St. Louis, Kansas City,Minneapolis, and Cleveland respectivelyMessrs. Bentley, Meyer, and Rosengren, Vice Presidents, FederalReserve Banks of New York, Philadelphia, and BostonrespectivelyMs. Gonczy and Mr. Koenig, Assistant Vice Presidents, FederalReserve Banks of Chicago and Dallas respectivelyMr. Trehan, Research Officer, Federal Reserve Bank of SanFrancisco
 
 Transcript of Federal Open Market Committee Meeting November 12, 1997CHAIRMAN GREENSPAN. I would like to welcome Governors Ferguson andGramlich to their first meeting and offer a preliminary farewell to President Melzer. We will dothe farewell more officially at the next meeting.MR. MELZER. Thanks, Alan.CHAIRMAN GREENSPAN. Why don’t we get started. I request that someone moveto approve the minutes.VICE CHAIRMAN MCDONOUGH. So move.CHAIRMAN GREENSPAN. Without objection. Peter Fisher.MR. FISHER. Thank you, Mr. Chairman. I will be referring to the package of charts that should be in front of you.
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It has a Class I cover and begins with a color chart showing 3-month deposit rates. Today I will begoing over four distinct subjects. To give you a roadmap: First, I willdiscuss market developments in general, focusing particularly on some of thecauses of events in Hong Kong. Second, I will discuss recent open marketoperations. Third, I would like to take a few minutes to bring the Committeeup-to-date on the performance of primary dealers. I think it is important for me to give you a sense of what I have been doing with the dealer community.After that, I will be seeking two votes. One is the normal vote to ratify theopen market operations since the September meeting. I also will be askingfor an increase in the intermeeting leeway. After that, I will come back andcomment on the swap line renewals, which are a separate agenda item. I willseek a vote to renew the swap agreements for another year.Focusing on market developments, the first page of charts shows3-month deposit rates, including the current rate, 3-month forward, 6-monthforward, and 9-month forward for the United States, Germany, and Japan. Inthe first panel, you can see that interest rate expectations began to back up herein the United States following the Chairman’s testimony before the BudgetCommittee on October 8. The next day, the Bundesbank hiked their repo rate by 30 basis points, as you can see in the middle panel. To many people infinancial markets around the world, this indicated, perhaps inaccurately, aconcerted effort by the industrial nations to raise interest rates globally. Many
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Copies of the charts used by Mr. Fisher are appended to this transcript.
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