FOMC Minutes

Meeting of Federal Open Market Committee

June 18, 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, June 18, 1968, at 9:30 a.m.

PRESENT:

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Martin, Chairman

Brimmer

Daane

Galusha

Hickman

Kimbrel

Maisel

Mitchell

Robertson

Sherrill

Bopp, Alternate for Mr. Ellis

Treiber, Alternate for Mr. Hayes

Messrs. 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. Broida, Assistant Secretary

Mr. Molony, Assistant Secretary

Mr. Hackley, General Counsel

Mr. Brill, Economist

Messrs. Axilrod, Hersey, Kareken, Link,

Mann, Partee, Reynolds, Solomon, and

Taylor, Associate Economists

Mr. Holmes, Manager, System Open Market

Account

Mr. Coombs, Special Manager, System Open

Market Account

Mr. Williams, Adviser, Division of Research

and Statistics, Board of Governors

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Mr. Wernick, Associate Adviser, Division

of Research and Statistics, Board of

Governors

Mr. Keir, Assistant Adviser, Division of

Research and Statistics, Board of

Governors

Miss Eaton, General Assistant, Office of

the Secretary, Board of Governors

Mr. Latham, First Vice President, Federal

Reserve Bank of Boston

Messrs. Eisenmenger, Eastburn, Parthemos,

Baughman, Andersen, Tow, Green, and

Craven, Vice Presidents of the Federal

Reserve Banks of Boston, Philadelphia,

Richmond, Chicago, St. Louis, Kansas

City, Dallas, and San Francisco,

respectively

Mr. Geng, Assistant Vice President, Federal

Reserve Bank of New York

By unanimous vote, the minutes of actions taken at the

meeting of the Federal Open Market Committee held on May 28, 1968,

were approved.

The memorandum of discussion for the meeting of the Federal

Open Market Committee held on May 28, 1968, was accepted.

By unanimous vote, the System open market transactions in

foreign currencies during the period May 28 through June 17, 1968,

were approved, ratified, and confirmed.

By unanimous vote, renewal for a further period of three

months of the System drawing on the Bank of Italy, maturing July 26,

1968, was authorized.

By unanimous vote, the open market transactions in

Government securities, agency obligations, and bankers' acceptances

6/18/68

during the period May 28 through June 17, 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 the very rapid increase in over-all economic

activity is being accompanied by persisting inflationary

pressures. Enactment of fiscal restraint measures now

under consideration in Congress, however, would be

expected to contribute to a considerable moderation of

the rate of advance in aggregate demands. Growth in

bank credit and time and savings deposits has been

relatively small on average in recent months, although

the money supply has expanded considerably as U.S.

Government deposits have declined. Both short- and

long-term interest rates have receded from the advanced

levels reached in May, mainly in reaction to enhanced

expectations of fiscal restraint. The U.S. foreign trade

balance and over-all payments position continue to be

a matter of serious concern. In this situation, it is

the policy of the Federal Open Market Committee to

foster financial conditions conducive to resistance of

inflationary pressures and attainment of reasonable

equilibrium in the country's balance of payments, while

taking account of the potential impact of developments

with respect to fiscal legislation.

To implement this policy, System open market

operations until the next meeting of the Committee

shall be conducted with a view to maintaining

generally firm but orderly conditions in the money

market; provided, however, that if the proposed fiscal

legislation is enacted operations shall accommodate

tendencies for short-term interest rates to decline in

connection with such affirmative congressional action

on the pending fiscal legislation so long as bank

credit expansion does not exceed current projections.

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It was agreed the next meeting of the Committee would be

held on Tuesday, July 16, 1968, at 9:30 a.m.

The meeting adjourned.

Secretary