FOMC Minutes

Meeting of Federal Open Market Committee

November 26, 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, November 26, 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. Sherman, Assistant Secretary

Mr. Broida, Assistant Secretary

Mr. Hackley, General Counsel

Mr. Brill, Economist

Messrs. Axilrod, Hersey, Kareken, Mann,

Partee, Reynolds, Solomon, and Taylor,

Associate Economists

Mr. Holmes, Manager, System Open Market

Account

Mr. Coombs, Special Manager, System Open

Market Account

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Mr. Cardon, Assistant to the Board of

Governors

Mr. O'Connell, Deputy General Counsel, Board

of Governors

Mr. Nichols, Special 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, Open Market Secretariat Assistant,

Office of the Secretary, Board of Governor.

Messrs. Eisenmenger, Eastburn, Parthemos,

Baughman, Jones, 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. Garvy, Economic Adviser, Federal Reserve

Bank of New York

Mr. Geng, Assistant Vice President, Federal

Reserve.Bank of New York

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

ing of the Federal Open Market Committee held on October 29, 1968,

were approved.

The memorandum of discussion for the meeting of the Federal

Open Market Committee held on October 29, 1968, was accepted.

By unanimous vote, the Committee ratified the actions of

members on November 22, 1968, (1) approving an increase from $700

million to $1 billion in the Federal Reserve reciprocal currency

arrangement with Bank of France, and the conforming amendment to

paragraph 2 of the authorization for System foreign currency

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operations, effective November 22, 1968; and (2) approving renewal

of the French swap arrangement for a period of one year when it

matured on December 27,

1968.

By unanimous vote, the System open market transactions in

foreign currencies during the period October 29 through November 25,

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 October 29 through November 25, 1968, were approved,

ratified,and confirmed.

With Messrs. Hayes, Hickman, Kimbrel, and Morris 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 information reviewed at this meeting suggests

that the expansion in over-all economic activity, while

still strong, is moderating somewhat further from its

very rapid pace earlier in the year. Upward pressures

on prices and costs are persisting. Most market interest

rates have risen further in recent weeks. Bank credit

has continued to expand rapidly. Growth in the money

supply has accelerated from the low average rate of

recent months, while expansion in commercial bank time

and savings deposits has slowed. Savings inflows to

thrift institutions increased somewhat further in Octo

ber but remained moderate. Following discussions among

leading industrial countries, France, Germany, and

Britain have acted to combat the recent speculation in

their currencies by taking steps designed to reduce

imbalances in their external payments. The U.S. foreign

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trade balance and over-all balance of payments improved

in the third quarter but partial data for recent weeks

suggest that the improvement is not being sustained, and

the underlying U.S. payments position remains a serious

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

Federal Open Market Committee to foster financial condi

tions conducive to sustainable economic growth, continued

resistance to inflationary pressures, and attainment of

reasonable equilibrium in the country's balance of payments.

To implement this policy, System open market opera

tions until the next meeting of the Committee shall be

conducted with a view to maintaining about the prevailing

conditions in money and short-term credit markets; provided,

however, that operations shall be modified if bank credit

expansion appears to be exceeding current projections.

It was agreed the next meeting of the Committee would be

held on Tuesday, December 17, 1968, at 9:30 a.m.

The meeting adjourned.

Secretary