FOMC Minutes

Meeting of Federal Open Market Committee

September 10, 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, September 10, 1968, at 9:30 a.m.

PRESENT:

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Martin, Chairman

Hayes, Vice Chairman

Brimmer

Daane

Galusha

Hickman

Kimbrel

Maisel

Mitchell

Morris

Robertson

Sherrill

Messrs. Bopp, Clay, Coldwell, Scanlon, and

Treiber, 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. Kenyon, Assistant Secretary

Mr. Broida, Assistant Secretary

Mr. Molony, Assistant Secretary

Mr. Hackley, General Counsel

Messrs. Axilrod, Hersey, Kareken, Reynolds,

Solomon, and Taylor, Associate Economists

Mr. Coombs, Special Manager, System Open

Market Account

Mr. Cardon, Assistant to the Board of Governors

Mr. Williams, Adviser, Division of Research

and Statistics, Board of Governors

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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, Open Market Secretariat Assistant,

Office of the Secretary, Board of

Governors

Messrs. Eisenmenger, Sternlight, Eastburn,

Parthemos, Baughman, Jones, Tow, Green,

and Craven, Vice Presidents of the Federal

Reserve Banks of Boston, New York,

Philadelphia, Richmond, Chicago, St.

Louis, Kansas City, Dallas, and San

Francisco, respectively

Mr. Garvy, Economic Adviser, Federal Reserve

Bank of New York

Mr. Geng, Assistant Vice President, Federal

Reserve Bank of New York

Mr. Shotwell, Senior Economist, Federal

Reserve Bank of Cleveland

By unanimous vote, the minutes of actions taken at the

meetings of the Federal Open Market Committee held on August 13 and

19, 1968, were approved.

The memoranda of discussion for the meetings of the Federal

Open Market Committee held on August 13 and 19, 1968, were accepted.

By unanimous vote, the System open market transactions in

foreign currencies during the period August 13 through September 9,

1968, were approved, ratified, and confirmed.

By unanimous vote, renewal for a period of up to one year

of the $700 million swap arrangement with Bank of France, maturing

September 27, 1968, was approved.

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By unanimous vote, the open market transactions in Govern

ment securities, agency obligations, and bankers' acceptances

during the period August 13 through September 9, 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 accord

ance with the following current economic policy directive:

The information reviewed at this meeting suggests

that, although consumer demands have been strong this

summer, reduced rates of inventory accumulation and

tapering growth of Government expenditures are being

reflected in a slowing of expansion in over-all activity.

Industrial prices have been increasing less rapidly in

recent months, but consumer prices have continued to

rise substantially and wage pressures remain strong.

Most market interest rates have changed little on

balance following reductions in Federal Reserve Bank

discount rates. Growth in bank credit and time and

savings deposits has been rapid this summer; growth in

the money supply slowed in August as U.S. Government

deposits were built up following an extended decline.

The earlier improvement in the U.S. balance of payments

was not maintained in August, according to preliminary

indications, and the foreign trade balance and under

lying payments position continue to be matters of serious

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

Federal Open Market Committee to foster financial

conditions conducive to sustainable economic growth,

continued resistance to inflationary pressures, and

attainment of reasonable equilibrium in the country's

balance of payments.

System open market operations until the next meeting

of the Committee shall be conducted with a view to main

taining about the prevailing conditions in money and

short-term credit markets; provided, however, that

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operations shall be modified if bank credit appears to

be deviating significantly from current projections.

It was agreed the next meeting of the Committee would be

held on Tuesday, October 8, 1968, at 9:30 a.m.

The meeting adjourned.

Secretary