FOMC Minutes

Meeting of Federal Open Market Committee

January 15, 1970

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 Thursday, January 15, 1970, at

9:30 a.m.1/

PRESENT:

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Martin, Chairman

Hayes, Vice Chairman

Bopp

Brimmer

Clay

Coldwell

Daane

Maisel

Mitchell

Robertson

Mr. Scanlon

Mr. Sherrill

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. Baughman, Gramley, Green,

Hersey, and Tow, Associate Economists

1/ This meeting, originally planned for January 13, 1970, had

been postponed two days because adverse weather conditions pre

vented several members of the Committee and staff from reaching

Washington by the former date.

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-2Holmes, Manager, System Open Market

Account

Mr. Coombs, Special Manager, System Open

Market Account

Mr.

Bernard, Assistant Secretary, Office

of the Secretary

Mr. Cardon, Assistant to the Board of

Governors

Messrs. Coyne and Nichols, Special Assistants

to the Board of Governors

Messrs. Wernick and Williams, Advisers,

Division of Research and Statistics,

Board of Governors

Mr. Keir, Associate Adviser, Division of

Research and Statistics, Board of Governors

Mr. Wendel, Chief, Government Finance Section,

Division of Research and Statistics,

Board of Governors

Miss Ormsby, Special Assistant, Office of the

Secretary, Board of Governors

Miss Eaton, Open Market Secretariat Assistant,

Office of the Secretary, Board of Governors

Mr.

Messrs. Eisenmenger, Parthemos, Jones, and

Craven, Senior Vice Presidents of the

Federal Reserve Banks of Boston, Richmond,

St. Louis, and San Francisco, respectively

Mr. Hocter, Vice President, Federal Reserve

Bank of Cleveland

Messrs. Garvy and Kareken, Economic Advisers

of the Federal Reserve Banks of New York

and Minneapolis, respectively

Messrs. Meek and Honea, Assistant Vice Presidents

of the Federal Reserve Banks of New York

and Atlanta, respectively

Mr. Willes, Senior Economist, Federal Reserve

Bank of Philadelphia

By unanimous vote, the minutes of actions taken at the meet

ing of the Federal Open Market Committee held on December 16, 1969,

were approved.

The memorandum of discussion for the meeting of the Federal

Open Market Committee held on December 16,

1969,

was accepted.

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-3

By unanimous vote, the System open market transactions in

foreign currencies during the period December 16, 1969, through

January 14, 1970, were approved, ratified, and confirmed.

By unanimous vote, the open market transactions in Govern

ment securities, agency obligations, and bankers' acceptances

during the period December 16, 1969, through January 14, 1970,

were approved, ratified, and confirmed.

By unanimous vote, the Federal Reserve Bank of New York

was authorized and directed, until otherwise directed by the Com

mittee, to execute transactions in the System Account in accordance

with the following current economic policy directive:

The information reviewed at this meeting suggests

that real economic activity leveled off in the fourth

quarter of 1969 and that little change is in prospect

for the early part of 1970. Prices and costs, however,

are continuing to rise at a rapid pace. Most market

interest rates have receded from highs reached during

December. Bank credit and the money supply increased

slightly on average in December and also over the fourth

quarter as a whole. Outstanding large-denomination CD's

held by domestic depositors have continued to contract

in recent months while foreign official time deposits

have expanded considerably. Flows of consumer-type time

and savings funds at banks and nonbank thrift institutions

have remained weak, and there apparently were sizable

net outflows after year-end interest crediting. U.S.

imports and exports have both grown further in recent

months but through November the trade balance showed

little or no further improvement from the third-quarter

level. At the year end the over-all balance of payments

statistics were buoyed by large temporary inflows of U.S.

corporate funds. In light of the foregoing developments,

it is the policy of the Federal Open Market Committee to

foster financial conditions conducive to the orderly

1/15/70

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, while taking account of

the forthcoming Treasury refunding, possible bank regu

latory changes and the Committee's desire to see a

modest growth in money and bank credit, System open

market operations until the next meeting of the Committee

shall be conducted with a view to maintaining firm

conditions in the money market; provided, however, that

operations shall be modified if money and bank credit

appear to be deviating significantly from current

projections.

By unanimous vote, transfer to the National Archives of

the minutes of the Committee for the years 1962-65, inclusive,

on the basis described in a memorandum from the Secretariat

dated January 8, 1970, was authorized.

It was agreed that the next meeting of the Federal Open

Market Committee would be held on Tuesday, February 10, 1970, at

9:30 a.m.

The meeting adjourned.

Secretary