FOMC Minutes

Meeting of Federal Open Market Committee

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

PRESENT:

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Martin, Chairman

Bopp

Brimmer

Clay

Coldwell

Daane

Maisel

Mitchell

Robertson

Scanlon

Sherrill

Treiber, Alternate for Mr. Hayes

Messrs. Francis, Heflin, Hickman, and Swan,

Alternate Members of the Federal Open

Market Committee

Messrs. Morris, Kimbrel, and Galusha,

Presidents of the Federal Reserve Banks

of Boston, Atlanta, and Minneapolis,

respectively

Mr. Holland, Secretary

Mr. Broida, Deputy Secretary

Messrs. Kenyon and Molony, Assistant

Secretaries

Mr. Hackley, General Counsel

Mr. Partee, Economist

Messrs. Axilrod, Baughman, Eastburn, Gramley,

Green, Hersey, Reynolds, Solomon, and

Tow, Associate Economists

Mr. Holmes, Manager, System Open Market Account

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

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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. Taylor and Jones, Senior Vice

Presidents of the Federal Reserve Banks

of Atlanta and St. Louis, respectively

Messrs. Eisenmenger and Hocter, Vice

Presidents of the Federal Reserve Banks

of Boston and Cleveland, respectively

Messrs. Garvy and Kareken, Economic Advisers,

Federal Reserve Banks of New York and

Minneapolis, respectively

Messrs. Bodner and Wallace, Assistant Vice

Presidents of the Federal Reserve Banks

of New York and Richmond, respectively

Mr. Cooper, Manager, Securities and Acceptance

Departments, Federal Reserve Bank of

New York

Mr. Lynn, Director of Research, Federal

Reserve Bank of San Francisco

By unanimous vote, the minutes of actions taken at the

meeting of the Federal Open Market Committee held on May 27, 1969,

were approved.

The memorandum of discussion for the meeting of the Federal

Open Market Committee held on May 27, 1969, was accepted.

By unanimous vote, the System open market transactions in

foreign currencies during the period May 27 through June 23, 1969,

were approved, ratified, and confirmed.

6/24/69

By unanimous vote, renewal for further periods of three

months, if requested, of the swap drawings by the National Bank

of Belgium maturing in the period July 2-16, 1969, was authorized.

It was agreed unanimously that the informal understandings

governing use of the existing authority to warehouse up to $1

billion of foreign currencies for the Stabilization Fund should

be temporarily liberalized to permit use of the full facility for

the general purposes of the Stabilization Fund without limitation

as to currency.

By unanimous vote, the open market transactions in

Government securities, agency obligations, and bankers' acceptances

during the period May 27 through June 23, 1969, were approved,

ratified, and confirmed.

With Mr. Maisel 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 economic policy directive:

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. Most

market interest rates have risen considerably on

balance in recent weeks, as credit demands continued

strong against the background of considerable restraint

on the banking system. Growth in bank credit and the

money supply thus far in 1969 has been limited, and

both declined somewhat on average in May. Large

denomination CD's have continued to run off at a rapid

pace recently, and net inflows of consumer-type time

6/24/69

and savings deposits have remained small.

At nonbank

thrift

institutions, savings inflows slowed somewhat

on average in April and May. Very heavy Euro-dollar

borrowing by U.S. banks through their foreign branches

produced a large surplus in the balance of payments on

the official settlements basis after mid-May. On the

other hand, high Euro-dollar interest rates apparently

also stimulated outflows of funds from the United States

that contributed to a large deficit on the liquidity

basis thus far in June. In light of the foregoing devel

opments, 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 opera

tions until the next meeting of the Committee shall be

conducted with a view to maintaining the firm conditions

currently prevailing in money and short-term credit

markets; provided, however, that operations shall be

modified if bank credit appears to be deviating signif

icantly from current projections or if unusual liquidity

pressures should develop.

It was agreed that the next meeting of the Committee would

be held on Tuesday,

July 15,

1969,

at 9:30 a.m.

The meeting adjourned.

Secretary