FOMC Minutes

Meeting of Federal Open Market Committee

December 17, 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, December 17, 1968, at

9:30 a.m.

PRESENT:

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Hayes, Vice Chairman, Presiding

Brimmer

Daane

Galusha

Hickman

Kimbrel

Maisel

Mitchell

Morris

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, Hersey, Kareken, Mann, Partee,

Reynolds, Solomon, and Taylor, Associate

Economists

Mr. Holmes, Manager, System Open Market Account

12/17/68

Mr. Cardon, Assistant to the Board

of Governors

Mr. Coyne, Special Assistant to the

Board of Governors

Mr. Williams, Adviser, Division of

Research and Statistics, 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 As

sistant, Office of the Secretary,

Board of Governors

Mr. Lewis, First Vice President, Federal

Reserve Bank of St. Louis

Messrs. Eisenmenger, MacLaury, Eastburn,

Jones, Tow, Green, and Craven, Vice

Presidents of the Federal Reserve

Banks of Boston, New York, Philadelphia,

St. Louis, Kansas City, Dallas, and San

Francisco, respectively

Mr. Garvy, Economic Adviser, Federal Reserve

Bank of New York

Messrs. Wallace and Scheld, Assistant Vice

Presidents of the Federal Reserve Banks

of Richmond and Chicago, respectively

Mr. Cooper, Manager, Securities and

Acceptance Departments, 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 November 26,

1968, were approved.

The memorandum of discussion for the meeting of the Federal

Open Market Committee held on November 26, 1968, was accepted.

12/17/68

By unanimous vote, the System open market transactions in

foreign currencies during the period November 26 through December 16,

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 November 26 through December 16, 1968, were ap

proved, 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 suggests

that over-all economic activity is expanding rapidly

and that upward pressures on prices and costs are

persisting. Market interest rates have risen consid

erably further in recent weeks. Bank credit growth has

been sustained by continuing strong expansion of time

and savings deposits, while growth in the money supply

has accelerated and U.S. Government deposits have

declined. The U.S. foreign trade surplus remains very

small and the over-all balance of payments apparently

worsened in October and November. In this situation,

it is the policy of the Federal Open Market Committee

to foster financial conditions conducive to the reduction

of inflationary pressures, with a view to encouraging

a more sustainable rate of economic growth and attaining

reasonable equilibrium in the country's balance of

payments.

To implement this policy, System open market

operations until the next meeting of the Committee shall

be conducted with a view to attaining firmer conditions

in money and short-term credit markets, taking account

of the effects of other possible monetary policy action;

12/17/68

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provided, however, that operations shall be modified

if bank credit expansion appears to be deviating

significantly from current projections.

It was agreed that the next meeting of the Committee would

be held on January 14, 1969, at 9:30 a.m.

The meeting adjourned.

Secretary