FOMC Minutes

Meeting of Federal Open Market Committee

February 10, 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 Tuesday, February 10, 1970, at 9:30 a.m.

PRESENT:

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Burns, Chairman

Hayes, Vice Chairman

Bopp

Brimmer

Clay

Coldwell

Daane

Maisel

Mitchell

Robertson

Scanlon

Sherrill

Messrs. Francis, 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, Link, 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. Bernard, Assistant Secretary, Office of

the Secretary, Board of Governors

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

Messrs. Hilkert and Black, First Vice Presidents

of the Federal Reserve Banks of Philadelphia

and Richmond, respectively

Messrs. Eisenmenger, Parthemos, Taylor, Jones,

and Craven, Senior Vice Presidents of the

Federal Reserve Banks of Boston, Richmond,

Atlanta, St. Louis, and San Francisco,

respectively

Mr. Hocter, Vice President, Federal Reserve

Bank of Cleveland

Mr. Kareken, Economic Adviser, Federal Reserve

Bank of Minneapolis

Mr. Cooper, Manager, Securities and Acceptance

Departments, Federal Reserve Bank of New York

By unanimous vote, Arthur F. Burns was elected Chairman of the

Federal Open Market Committee to serve until the election of his

successor at the first meeting of the Committee after February 28,

1970, with the understanding that in the event of the discontinuance

of his official connection with the Board of Governors during that

period, he would cease to have any official connection with the

Federal Open Market Committee.

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2/10/70

By unanimous vote, the minutes of actions taken at the

meeting of the Federal Open Market Committee held on January 15,

1970, were approved.

The memorandum of discussion for the meeting of the Federal

Open Market Committee held on January 15, 1970, was accepted.

By unanimous vote, the System open market transactions in

foreign currencies during the period January 15 through February 9,

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 January 15 through February 9, 1970, were

approved, ratified, and confirmed.

With Messrs. Hayes, Brimmer, and Coldwell 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 current

economic policy directive:

The information reviewed at this meeting suggests

that real economic activity, which leveled off in the

fourth quarter of 1969, may be weakening further in

early 1970. Prices and costs, however, are continuing

to rise at a rapid pace. Long-term market interest

rates recently have fluctuated under the competing

influences of heavy demands for funds and shifts in

investor attitudes regarding the outlook for monetary

policy. Bank credit declined in January but the money

supply increased substantially on average; both had

risen slightly in the fourth quarter. Flows of time

and savings funds at banks and nonbank thrift

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institutions have remained generally weak since year

end, and they apparently have been affected little

thus far by the recent increases in maximum rates pay

able for such funds.

The U.S. foreign trade balance

improved somewhat in December, as imports fell off.

The over-all balance of payments has been in substan

tial deficit in recent weeks.

In light of the foregoing

developments, it is the policy of the Federal Open

Market Committee to foster financial conditions conducive

to the orderly 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 current Treasury refunding, possible bank regula

tory changes and the Committee's desire to see moderate

growth in money and bank credit over the months ahead,

System open market operations until the next meeting

of the Committee shall be conducted with a view to

moving gradually toward somewhat less firm conditions

in the money market; provided, however, that operations

shall be modified promptly to resist any tendency for

money and bank credit to deviate significantly from a

moderate growth pattern.

It was agreed that the next meeting of the Federal Open

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

9:30 a.m.

The meeting adjourned.

Secretary