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EXECUI i v j&
EXECUTIVE OFFICE OF TH E PRESIDENT
BU REAU O F TH E B U D G ET
W A SH I

OFFIC E O F
TH E D IRE CTO R




October 4, 1965

MEMORANDUM FOR THE PRESIDENT
Subject:

Monetary policy and the budget

When Federal Reserve staff members prepare their economic
forecasts for the Board of Governors, one of the important
elements is the budgetary outlook. Normally, and on a
confidential basis, we try to keep them abreast of our
thinking, in a general way.
sver, I have instructed my staff not to discuss the
retary outlook with the Fed. Quite apart from security
liderations, I am afraid that the budgetary outlook
■ be used as an excuse to tighten u p on monetary pold

I have discussed this with CEA members, and will talk to
Secretary Fowler about it before our Quadriad meeting.
I believe it is very important that we avoid a discussion
of budgetary totals at the Quadriad meeting.

Charles L. Schultze
Director


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102