FOMC Minutes

Meeting of Federal Open Market Committee

December 16, 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, December 16, 1969, at 9:30 a.m.

PRESENT:

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Martin, Chairman

Hayes, Vice Chairman

Bopp

Brimmer

Clay

Coldwell

Maisel

Mitchell

Robertson

Scanlon

Sherrill

Messrs. Heflin and Hickman, 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. Coombs, Special Manager, System Open Market

Account

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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

Messrs. Keir and Wernick, Associate Advisers,

Division of Research and Statistics,

Board of Governors

Mr. Bernard, Special Assistant, Office of the

Secretary, Board of Governors

Mr. Wendel, Chief, 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. Lewis and Merritt, First Vice

Presidents of the Federal Reserve Banks

of St. Louis and San Francisco, respectively

Messrs. Eisenmenger, Parthemos, Taylor, and

Craven, Senior Vice Presidents of the

Federal Reserve Banks of Boston, Richmond,

Atlanta, and San Francisco, respectively

Mr. Hocter, Vice President, Federal Reserve

Bank of Cleveland

Mr. Kareken, Economic Adviser, Federal

Reserve Bank of Minneapolis

Mr. Davis, Adviser, Federal Reserve Bank

of New York

Mr. Carlson, Assistant Vice President,

Federal Reserve Bank of St. Louis

Mr. Sandberg, Securities Trading Officer,

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 25,

1969, were approved.

The memorandum of discussion for the meeting of the Federal

Open Market Committee held on November 25,

1969, was accepted.

12/16/69

By unanimous vote, the System open market transactions in

foreign currencies during the period November 25 through December 15,

1969, were approved, ratified, and confirmed.

By unanimous vote, the open market transactions in

Government securities, agency obligations, and bankers' acceptances

during the period November 25 through December 15, 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 indicates

that real economic activity has expanded only moderately

in recent quarters and that a further slowing of growth

appears to be in process. Prices and costs, however,

are continuing to rise at a rapid pace. Most market

interest rates have advanced further in recent weeks

partly as a result of expectational factors, including

concern about the outlook for fiscal policy. Bank

credit rose rapidly in November after declining on

average in October, while the money supply increased

moderately over the two-month period; in the third

quarter, bank credit had declined on balance and the

money supply was about unchanged. The net contraction

of outstanding large-denomination CD's has slowed

markedly since late summer, apparently reflecting mainly

an increase in foreign official time deposits. However,

flows of consumer-type time and savings funds at banks

and nonbank thrift institutions have remained weak, and

there is considerable market concern about the potential

size of net outflows expected around the year end. In

November the balance of payments deficit on the liquidity

basis diminished further and the official settlements

balance reverted to surplus, mainly as a result of return

12/16/69

flows out of the German mark and renewed borrowing by

U.S. banks from their foreign branches. 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 sustainable 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 firm conditions in the money market; pro

vided, however, that operations shall be modified if

bank credit appears to be deviating significantly

from current projections or if unusual liquidity

pressures should develop.

It was agreed that the next meeting of the Federal

Open Market Committee would be held on Tuesday, January 13,

1970, at 9:30 a.m.

The meeting adjourned.

Secretary