FOMC Minutes

Meeting of Federal Open Market Committee

April 30, 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. C., on Tuesday, April 30, 1968, at 9:30 a.m.

PRESENT:

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Martin, Chairman

Hayes, Vice Chairman

Brimmer

Daane

Ellis

Galusha

Hickman

Kimbrel

Maisel

Robertson

Sherrill

Messrs. Bopp, Clay, Coldwell, and Scanlon,

Alternate Members of the Federal Open

Market Committee

Messrs. Heflin, Francis, and Swan, Presidents

of the Federal Reserve Banks of Richmond,

St. Louis, and San Francisco, 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. Axilrod, Kareken, Link, Mann,

Partee, Reynolds, and Taylor, Associate

Economists

Mr. Holmes, Manager, System Open Market

Account

Mr. Coombs, Special Manager, System Open

Market Account

4/30/68

Mr. Fauver, Assistant to the 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

Messrs. Eisenmenger, Eastburn, Baughman,

Andersen, Tow, Green, and Craven, Vice

Presidents of the Federal Reserve Banks

of Boston, Philadelphia, Chicago,

St. Louis, Kansas City, Dallas, and

San Francisco, respectively

Mr. Snellings, Assistant Vice President

Federal Reserve Bank of Richmond

Mr. Cooper, Manager, Securities and

Acceptance Departments, Federal Reserve

Bank of New York

By unanimous vote, the minutes of actions taken at the meetings

of the Federal Open Market Committee held on March 14 and April 2, 1968,

were approved.

The memoranda of discussion for the meetings of the Federal

Open Market Committee held on March 14 and April 2, 1968, were accepted.

By unanimous vote, the action taken on April 11, 1968, under

paragraph 3 of the authorization for System foreign currency operations,

by the Subcommittee designated in paragraph 6 of the authorization,

approving a purchase from the Netherlands Bank of $12.84 million

-3

4/30/68

equivalent of Dutch guilders at a rate other than the prevailing

market rate, was ratified.

By unanimous vote, the System open market transactions in

foreign currencies during the period April 2 through 29, 1968,

were approved, ratified, and confirmed.

By unanimous vote, paragraph IB(3) of the authorization for

System foreign currency operations was amended, effective immediately,

to read as follows:

1B(3).

Sterling purchased on a covered or guaranteed

basis in terms of the dollar, under agreement with the Bank

of England, up to $250 million equivalent.

By unanimous vote, renewal for a further period of three

months of the drawing by the Bank of England maturing on May 21,

1968, was authorized.

By unanimous vote, renewal for further periods of three months

of the two System drawings on the Belgian National Bank maturing on

May 14 and May 28, 1968, respectively, was authorized.

By unanimous vote, the open market transactions in Government

securities, agency obligations, and bankers' acceptances during the

period April 2 through 29, 1968, were approved, ratified and confirmed.

With Mr. Hickman 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:

4/30/68

The information reviewed at this meeting indicates that

over-all economic activity has expanded at a very rapid pace

thus far in 1968, with prices rising substantially, and that

prospects are for a continuing rapid advance in activity and

persisting inflationary pressures in the period ahead. Since

late fall, growth rates of bank credit, the money supply, and

time and savings accounts at financial institutions have on

balance moderated considerably. Market interest rates have

risen in recent weeks, partly in reaction to the firming of

monetary policy including the further increase in Federal Reserve

discount rates. The U.S. foreign trade balance has worsened

further, and the international payments position of the United

In this

States continues to be a matter of serious concern.

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

to foster financial conditions conducive to resistance of infla

tionary pressures and attainment of reasonable equilibrium in

the country's balance of payments.

To implement this policy, while taking account of Treasury

financing activity, System open market operations until the

next meeting of the Committee shall be conducted with a view

to maintaining the firmer conditions prevailing in the money

market; provided, however, that operations shall be modified,

to the extent permitted by Treasury financing, if bank credit

appears to be deviating significantly from current projections.

It

was agreed that the next meeting of the Committee would

be held on Tuesday, May 28,

1968, at 9:30 a.m.

The meeting adjourned.

Secretary