FOMC Minutes

Meeting of Federal Open Market Committee

May 27, 1969

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, May 27, 1969, at 9:30 a.m.

PRESENT:

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Martin, Chairman

Hayes, Vice Chairman

Bopp

Brimmer

Clay

Coldwell

Daane

Maisel

Mitchell

Robertson

Scanlon

Sherrill

Messrs. Francis, Heflin, and Swan, Alternate

Members of the Federal Open Market

Committee

Messrs. Kimbrel and Galusha, Presidents of

the Federal Reserve Banks of Atlanta and

Minneapolis, respectively

Mr. Holland, Secretary

Mr. Broida, Deputy Secretary

Mr. Molony, Assistant Secretary

Mr. Hexter, Assistant General Counsel

Mr. Partee, Economist

Messrs. Axilrod, Baughman, Eastburn, Gramley,

Green, Hersey, Link, Reynolds, Solomon,

and Tow, Associate Economists

Mr. Holmes, Manager, System Open Market

Account

Mr. Coombs, Special Manager, System Open

Market Account

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5/27/69

Mr. Sherman, Consultant, Board of Governors

Mr. Cardon, Assistant to the Board of

Governors

Messrs. Coyne and Nichols, Special Assistants

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

Assistant, Office of the Secretary,

Board of Governors

Messrs. Latham and MacDonald, First Vice

Presidents of the Federal Reserve Banks

of Boston and Cleveland, respectively

Messrs. Taylor, Jones, and Craven, Senior

Vice Presidents of the Federal Reserve

Banks of Atlanta, St. Louis, and

San Francisco, respectively

Messrs. Eisenmenger, Hocter, and Snellings,

Vice Presidents of the Federal Reserve

Banks of Boston, Cleveland, and Richmond,

respectively

Mr. Duprey, Senior Economist, Federal

Reserve Bank of Minneapolis

Mr. Sandberg, Special Assistant, Securities

Department, 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 April 29, 1969,

were approved.

The memorandum of discussion for the meeting of the Federal

Open Market Committee held on April 29, 1969, was accepted.

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By unanimous vote, J. Charles Partee was elected Economist

and Lyle E. Gramley,Associate Economist of the Federal Open Market

Committee to serve until the first meeting of the Committee after

February 28, 1970, with the understanding that in the event of the

discontinuance of their official connection with the Board of

Governors, they would cease to have any official connection with

the Federal Open Market Committee.

By unanimous vote, the action of Committee members on

May 14, 1969, approving equalization of System swap lines with the

Netherlands Bank and the National Bank of Belgium at $300 million each,

and the conforming amendments to paragraph 2 of the authorization

for System foreign currency operations, effective immediately, was

ratified.

As a result of these actions, the table contained in

paragraph 2 of the authorization for System foreign currency

operations was amended, effective May 14, 1969, to read as

follows:

Foreign bank

Austrian National Bank

National Bank of Belgium

Bank of Canada

National Bank of Denmark

Bank of England

Bank of France

German Federal Bank

Amount of

arrangement

(millions of

dollars equivalent)

100

300

1,000

100

2,000

1,000

1,000

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Foreign bank

Amount of

arrangement

(millions of

dollars equivalent)

Bank of Italy

1,000

Bank of Japan

1,000

Bank of Mexico

Netherlands Bank

Bank of Norway

Bank of Sweden

Swiss National Bank

Bank for International Settlements:

Dollars against Swiss francs

Dollars against authorized European

currencies other than Swiss francs

130

300

100

250

600

600

1,000

By unanimous vote, the System open market transactions in

foreign currencies during the period April 29 through May 26, 1969,

were approved, ratified, and confirmed.

By unanimous vote, renewal for further periods of three

months, if requested, of the two drawings by the Bank of England

maturing in the period June 9-10, 1969, and totaling $150 million,

was authorized.

By unanimous vote, the open market transactions in Govern

ment securities, agency obligations, and bankers' acceptances

during the period April 29 through May 26, 1969, 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:

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The information reviewed at this meeting suggests

that expansion in real economic activity is continuing

to moderate slightly, but that substantial upward

pressures on prices and costs are persisting. Interest

rates have risen in recent weeks. Bank credit and the

money supply appear to be changing little

on average in

May after bulging in April. The outstanding volume of

large-denomination CD's has continued to decline, and

the available evidence suggests only modest recovery in

other time and savings deposits at banks and in savings

balances at nonbank thrift institutions following the

outflows of the first half of April. The U.S. balance

of payments on the liquidity basis was in sizable

deficit in the first

4 months of 1969 but the balance

on the official settlements basis remained in surplus

as a result of large inflows of Euro-dollars. However,

there were substantial outflows of funds from the United

States in the first half of May, during the period of

intense speculation on a revaluation of the German mark,

and the payments balance was in very large deficit on

both bases. In light of the foregoing developments, 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 maintaining the

prevailing pressure on money and short-term credit

markets; provided, however, that operations shall be

modified 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, June 24, 1969, at 9:30 a.m.

The meeting adjourned.

Secretary