FOMC Minutes

Meeting of Federal Open Market Committee

July 15,

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, July 15, 1969, at 9:30 a.m.

PRESENT:

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Martin, Chairman

Bopp

Brimmer

Clay

Coldwell

Daane

Maisel

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. Broida, Deputy Secretary

Mr. Kenyon,

Assistant Secretary

Mr. Hackley, General Counsel

Mr. Partee, Economist

Messrs. Axilrod, Baughman, Eastburn, Green,

Hersey, Reynolds, and Tow, Associate

Economists

Mr. Holmes, Manager, System Open Market

Account

Mr. Coombs, Special Manager, System Open

Market Account

Mr. Cardon, Assistant to the Board of Governors

Mr. Coyne, Special Assistant to the Board of

Governors

7/15/69

Mr. Williams, Adviser, Division of Research

and Statistics, Board of Governors

Mr. Wernick, Associate Adviser, Division of

Research and Statistics, Board of

Governors

Mr. Bernard, Special Assistant, Office of

the Secretary, Board of Governors

Mr. Baker, Economist, Government Finance

Section, Division of Research and

Statistics, Board of Governors

Miss Eaton, Open Market Secretariat

Assistant, Office of the Secretary,

Board of Governors

Messrs. Parthemos and Craven, Senior Vice

Presidents of the Federal Reserve Banks

of Richmond and San Francisco, respectively

Messrs. Hocter, Brandt, and Andersen, Vice

Presidents of the Federal Reserve Banks

of Cleveland, Atlanta, and St. Louis,

respectively

Messrs. Garvy and Kareken, Economic Advisers,

Federal Reserve Banks of New York and

Minneapolis, respectively

Mr. Meek, Assistant Vice President, Federal

Reserve Bank of New York

Mr. Duprey, Senior Economist, Federal Reserve

Bank of Minneapolis

Mr. Fieleke, Economist, Federal Reserve Bank

of Boston

By unanimous vote, the minutes of actions taken at the

meeting of the Federal Open Market Committee held on June 24, 1969,

were approved.

The memorandum of discussion for the meeting of the Federal

Open Market Committee held on June 24, 1969, was accepted.

By unanimous vote, the System open market transactions in

foreign currencies during the period June 24 through July 14, 1969,

were approved, ratified, and confirmed.

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7/15/69

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 August 8-15, 1969, was authorized.

By unanimous vote, renewal for further periods of three

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

maturing in the period August 11-21, 1969, was authorized.

By unanimous vote, the open market transactions in Govern

ment securities, agency obligations, and bankers' acceptances

during the period June 24 through July 14, 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:

The information reviewed at this meeting suggests

that expansion in real economic activity, after moderat

ing slightly in the first quarter, has continued at

about the same pace since then. Substantial upward

pressures on prices and costs are persisting. Market

interest rates have fluctuated widely recently, partly

because of varying expectations, although credit demands

remain relatively strong. Short-term rates on balance

have continued under upward pressure, against the back

ground of considerable restraint on the banking system.

In June bank credit showed little change, after allowance

for assets sold to affiliates and to customers with bank

guarantees. Growth in the money supply resumed at a

slow pace, and the run-off of large-denomination CD's

which began in mid-December continued without abatement.

There apparently were substantial net outflows from

consumer-type time and savings accounts at banks and

7/15/69

nonbank thrift institutions around midyear, following a

period of slackened growth. The over-all balance of

payments deficit on the liquidity basis rose sharply in

the second quarter; there were large outflows into

German marks and into Euro-dollar deposits, and there

was no significant improvement in net exports. In

contrast, there was another large surplus on the official

settlements basis as U.S. banks borrowed heavily in the

Euro-dollar market. In light of the foregoing develop

ments, 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, while taking account of

the forthcoming Treasury refunding, System open market

operations until the next meeting of the Committee shall

be conducted with a view to maintaining the currently

prevailing firm conditions in money and short-term

credit markets; provided, however, that operations shall

be modified, to the extent permitted by the Treasury

refunding, if bank credit appears to be deviating

significantly from current projections.

It was agreed that the next meeting of the Federal Open

Market Committee would be held on Tuesday, August 12, 1969, at

9:30 a.m.

The meeting adjourned.

Deputy Secretary