FOMC Minutes

Meeting of Federal Open Market Committee

June 23, 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, June 23, 1970, at 9:00 a.m.

Present:

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Burns, Chairman

Brimmer

Daane

Francis

Heflin

Hickman

Maisel

Mitchell

Robertson

Sherrill

Swan

Treiber, Alternate for Mr. Hayes

Messrs. Kimbrel and Morris, Alternate Members of

the Federal Open Market Committee

Messrs. Eastburn, Clay, and Coldwell, Presidents

of the Federal Reserve Banks of Philadelphia,

Kansas City, and Dallas, respectively

Mr. Holland, Secretary

Mr. Broida, Deputy Secretary

Messrs. Kenyon and Molony, Assistant

Secretaries

Mr. Hackley, General Counsel

Mr. Partee, Economist

Messrs. Craven, Gramley, Hersey, Hocter, Jones,

Parthemos, and Solomon, Associate Economists

Mr. Holmes, Manager, System Open Market Account

Mr. Coombs, Special Manager, System Open Market

Account

Mr. Bernard, Assistant Secretary, Office of

the Secretary, Board of Governors

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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. Baughman and Strothman, First Vice

Presidents, Federal Reserve Banks of

Chicago and Minneapolis, respectively

Messrs. Eisenmenger, Taylor, and Tow, Senior

Vice Presidents, Federal Reserve Banks of

Boston, Atlanta, and Kansas City,

respectively

Messrs. Scheld and Green, Vice Presidents,

Federal Reserve Banks of Chicago and

Dallas, respectively

Messrs. Gustus and Kareken, Economic Advisers,

Federal Reserve Banks of Philadelphia and

Minneapolis, respectively

Mr. Davis, Adviser, Federal Reserve Bank of

New York

Mr. Meek, Assistant Vice President, 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 May 26, 1970, were

approved.

The memorandum of discussion for the meeting of the Federal

Open Market Committee held on May 26, 1970, was accepted.

By unanimous vote, the System open market transactions in

foreign currencies during the period May 26 through June 22, 1970,

were approved, ratified, and confirmed.

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By unanimous vote, the open market transactions in Government

securities, agency obligations, and bankers' acceptances during th

period May 26 through June 22, 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 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 is changing little in the

current quarter after declining appreciably earlier in

the year. Prices and costs generally are continuing to

rise at a rapid pace, although some components of major

price indexes recently have shown moderating tendencies.

Since late May market interest rates have shown mixed

changes following earlier sharp advances, and prices of

common stocks have recovered part of the large decline

of preceding weeks.

Attitudes in financial markets

continue to be affected by uncertainties and conditions

remain sensitive, particularly in light of the insolvency

of a major railroad. In May bank credit changed little

and the money supply rose moderately on average, follow

ing substantial increases in both measures in March and

April. Inflows of consumer-type time and savings funds

at banks and nonbank thrift institutions have been sizable

in recent months, but the brief spring upturn in large

denomination CD's outstanding at banks has ceased. The

over-all balance of payments was in heavy deficit in

April and May.

In light of the foregoing developments,

it is the policy of the Federal Open Market Committee

to foster financial conditions conducive to orderly

reduction in the rate of inflation, while encouraging

the resumption of sustainable economic growth and the

attainment of reasonable equilibrium in the country's

balance of payments.

To implement this policy, in view of persisting

market uncertainties and liquidity strains, open market

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operations until the next meeting of the Committee shall

continue to be conducted with a view to moderating

pressures on financial markets. To the extent compatible

therewith, the bank reserves and money market conditions

maintained shall be consistent with the Committee's

longer-run objective of moderate growth in money and

bank credit, taking account of the Board's regulatory

action effective June 24 and some possible consequent

shifting of credit flows from market to banking channels.

It was agreed that the next meeting of the Federal Open

Market Committee would be held on Tuesday, July 21, 1970, at

9:30 a.m.

Thereupon the meeting adjourned.

Secretary