FOMC Minutes

Meeting of Federal Open Market Committee

October 3, 1967

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, October 3, 1967, at

9:30 a.m.

PRESENT:

Mr. Hayes, Vice Chairman

Mr. Brimmer

Mr. Daane

Mr. Francis

Mr. Maisel

Mr. Mitchell

Mr. Robertson

Mr. Scanlon

Mr. Sherrill

Mr. Swan

Mr. Wayne

Messrs. Ellis, Hickman, and Galusha, Alternate

Members of the Federal Open Market Committee

Messrs. Bopp, Clay, and Irons, Presidents of the

Federal Reserve Banks of Philadelphia, Kansas

City, and Dallas, respectively

Mr. Holland, Secretary

Mr. Kenyon, Assistant Secretary

Mr. Broida, Assistant Secretary

Mr. Molony, Assistant Secretary

Mr. Hexter, Assistant General Counsel

Mr. Brill, Economist

Messrs. Baughman, Craven, Hersey, Koch, Partee,

Parthemos, and Solomon, Associate

Economists

Mr. Holmes, Manager, System Open Market Account

Mr. Coombs, Special Manager, System Open Market

Account

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Mr. Fauver, Assistant to the Board of Governors

Mr. Williams, Adviser, Division of Research and

Statistics, Board of Governors

Mr. Reynolds, Adviser, Division of International

Finance, Board of Governors

Mr. Axilrod, Associate Adviser, Division of

Research and Statistics, Board of Governors

Miss Eaton, General Assistant, Office of the

Secretary, Board of Governors

Miss McWhirter, Analyst, Office of the Secretary,

Board of Governors

Mr. Kimbrel, First Vice President, Federal

Reserve Bank of Atlanta

Messrs. Link, Melnicoff, Mann, Taylor, Andersen,

Tow, and Green, Vice Presidents of the

Federal Reserve Banks of New York, Philadelphia,

Cleveland, Atlanta, St. Louis, Kansas City,

and Dallas, respectively

Mr. Anderson, Financial Economist, Federal

Reserve Bank of Boston

Mr. Duprey, Economist, Federal Reserve Bank of

Minneapolis

Mr. Deming, Manager, Securities Department,

Federal Reserve Bank of New York

By unanimous vote, James Parthemos was elected Associate

Economist, effective immediately, in place of Benjamin U. Ratchford.

By unanimous vote, the minutes of actions taken at the

meeting of the Federal Open Market Committee held on September 12,

1967, were approved.

The memorandum of discussion for the meeting of the Federal

Open Market Committee held on September 12, 1967, was accepted.

By unanimous vote, the System open market transactions in

foreign currencies during the period September 12 through October 2,

1967, were approved, ratified, and confirmed.

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By unanimous vote, renewal until December 29, 1967, of

the $450 million standby swap arrangement with Bank of Italy,

scheduled to mature on October 20, 1967, was approved, on the

understanding that the arrangement would have a twelve-month

term after December 29, 1967.

By unanimous vote, the open market transactions in

Government securities, agency obligations, and bankers' accep

tances during the period September 12 through October 2, 1967,

were approved, ratified, and confirmed.

With Messrs. Francis and Scanlon 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 current

economic policy directive:

The economic and financial developments reviewed at

this meeting indicate that, apart from the effects of the

strike in the automobile industry, underlying economic

conditions have strengthened and prospects favor more rapid

growth later in the year. Upward pressures on costs persist,

average prices of industrial commodities have risen further,

and the rate of increase in consumer prices remains high.

While there recently have been large inflows of liquid funds

from abroad through foreign branches of U.S. banks, the

balance of payments continues to reflect a substantial under

lying deficit. Bank credit expansion has continued large,

although there was some moderation in September from the

rapid July-August rate. The volume of corporate bond flota

tions has slackened, but Federal and State and local Govern

ment financing demands remain large and most interest rates

have on balance moved up somewhat further. The President's

new fiscal program is still pending before Congress. In

this situation, it is the policy of the Federal Open Market

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Committee to foster financial conditions, including

bank credit growth, conducive to sustainable economic

expansion, recognizing the need for reasonable price

stability for both domestic and balance of payments

purposes.

To implement this policy, System open market

operations until the next meeting of the Committee shall

be conducted with a view to maintaining about the pre

vailing conditions in the money market; but operations

shall be modified, to the extent permitted by Treasury

financing, to moderate any apparent tendency for bank

credit to expand significantly more than currently

expected.

It was agreed that the next meeting of the Committee would

be held on Tuesday, October 24, 1967, at 9:30 a.m.

The meeting adjourned.

Secretary