FOMC Minutes

of Federal Open Market Committee

Meeting

Committee

Market

Open

Federal

of

Meeting

February 6, 1968

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.

PRESENT:

C.,

on Tuesday, February 6, 1968, at 9:30 a.m.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Martin, Chairman

Hayes, Vice Chairman

Brimmer

Daane

Francis

Maisel

Mitchell

Robertson

Scanlon

Sherrill

Swan

Wayne

Messrs.

Ellis, Hickman, and Galusha,

Alternate

Members of the Federal Open Market Committee

Messrs. Bopp, Kimbrel, Clay, and Coldwell,

Presidents of the Federal Reserve Banks of

Philadelphia, Atlanta, Kansas City, and

Dallas, respectively

Mr. Holland, Secretary

Mr. Sherman, Assistant Secretary

Mr. Kenyon, Assistant Secretary

Mr. Broida, Assistant Secretary

Mr. Molony, Assistant Secretary

Mr. Hackley, General Counsel

Mr. Brill, Economist

Messrs. Baughman, Garvy, Hersey, Partee,

Parthemos, and Solomon, Associate

Economists

Mr. Holmes, Manager, System Open Market Account

2/6/68

Messrs. Cardon and Fauver, Assistants to

the Board of Governors

Messrs. Axilrod and Gramley, Advisers,

Division of Research and Statistics,

Board of Governors

Mr. Reynolds, Associate Director, Division

of International Finance, Board of

Governors

Mr. Wernick, Associate Adviser, Division

of Research and Statistics, Board of

Governors

Mr. Keir, Assistant Adviser, Division of

Research and Statistics, Board of

Governors

Mr. Bernard, Special Assistant, Office of

the Secretary, 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. Heflin, First Vice President of the

Federal Reserve of Richmond

Messrs. Eastburn, Mann, Taylor, Andersen,

Tow, and Green, Vice Presidents of the

Federal Reserve Banks of Philadelphia,

Cleveland, Atlanta, St. Louis, Kansas

City, and Dallas, respectively

Messrs. Bodner and Meek, Assistant Vice

Presidents, Federal Reserve Bank of

New York

Mr. Anderson, Financial Economist, Federal

Reserve Bank of Boston

Mr. Runyon, Economist, Federal Reserve

Bank of San Francisco

Mr. Kareken, Consultant, Federal Reserve

Bank of Minneapolis

By unanimous vote, the minutes of actions taken at the

meeting of the Federal Open Market Committee held on January 9,

1968, were approved.

The memorandum of discussion for the meeting of the Federal

Open Market Committee held on January 9, 1968, was accepted.

-3

2/6/68

By unanimous vote, the System open market transactions in

foreign currencies during the period January 9 through February 5,

1968, were approved, ratified, and confirmed.

By unanimous vote, the open market transactions in Govern

ment securities, agency obligations, and bankers' acceptances

during the period January 9 through February 5, 1968, 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,

to execute transactions in the System Account in accordance with

the following current economic policy directive:

The information reviewed at this meeting indicates

that over-all economic activity has been expanding

rapidly, with both industrial and consumer prices

rising at a substantial rate, and that prospects are for

continuing rapid growth and persisting inflationary

pressures in the period ahead. The imbalance in U.S.

international transactions worsened further in late

1967, primarily because of a sharp reduction in the

surplus on merchandise trade. Although day-to-day

money market rates have remained firm, rates on other

short-term instruments have declined recently; meanwhile,

long-term bond yields have fluctuated irregularly below

the peaks reached late last year. Growth in bank credit

resumed in January, reflecting both loan expansion

around the year end and Treasury financing. The money

supply expanded sharply following earlier slackening,

but flows into time and savings accounts at bank and

nonbank financial intermediaries have continued to

moderate. In this situation, it is the policy of the

Federal Open Market Committee to foster financial

conditions conducive to resistance of inflationary

pressures and progress toward reasonable equilibrium

in the country's balance of payments.

2/6/68

To implement this policy, while taking account of

Treasury financing activity, System open market opera

tions until the next meeting of the Committee shall be

conducted with a view to maintaining firm conditions

in the money market, and operations shall be modified

to the extent permitted by Treasury financing if bank

credit appears to be expanding as rapidly as is

currently projected.

It was agreed that the next meeting of the Committee, which

would be the annual organizational meeting, would be held on

Tuesday, March 5, 1968, at 9:30 a.m.

The meeting adjourned.

Secretary