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of Federal Open Market Committee Meeting Committee Market Open Federal of Meeting February 6, 1968 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. PRESENT: C., on Tuesday, February 6, 1968, at 9:30 a.m. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Martin, Chairman Hayes, Vice Chairman Brimmer Daane Francis Maisel Mitchell Robertson Scanlon Sherrill Swan Wayne Messrs. Ellis, Hickman, and Galusha, Alternate Members of the Federal Open Market Committee Messrs. Bopp, Kimbrel, Clay, and Coldwell, Presidents of the Federal Reserve Banks of Philadelphia, Atlanta, Kansas City, and Dallas, respectively Mr. Holland, Secretary Mr. Sherman, Assistant Secretary Mr. Kenyon, Assistant Secretary Mr. Broida, Assistant Secretary Mr. Molony, Assistant Secretary Mr. Hackley, General Counsel Mr. Brill, Economist Messrs. Baughman, Garvy, Hersey, Partee, Parthemos, and Solomon, Associate Economists Mr. Holmes, Manager, System Open Market Account 2/6/68 Messrs. Cardon and Fauver, Assistants to the Board of Governors Messrs. Axilrod and Gramley, Advisers, Division of Research and Statistics, Board of Governors Mr. Reynolds, Associate Director, Division of International Finance, Board of Governors Mr. Wernick, Associate Adviser, Division of Research and Statistics, Board of Governors Mr. Keir, Assistant Adviser, Division of Research and Statistics, Board of Governors Mr. Bernard, Special Assistant, Office of the Secretary, Board of Governors Miss Eaton, General Assistant, Office of the Secretary, Board of Governors Miss McWhirter, Analyst, Office of the Secretary, Board of Governors Mr. Heflin, First Vice President of the Federal Reserve of Richmond Messrs. Eastburn, Mann, Taylor, Andersen, Tow, and Green, Vice Presidents of the Federal Reserve Banks of Philadelphia, Cleveland, Atlanta, St. Louis, Kansas City, and Dallas, respectively Messrs. Bodner and Meek, Assistant Vice Presidents, Federal Reserve Bank of New York Mr. Anderson, Financial Economist, Federal Reserve Bank of Boston Mr. Runyon, Economist, Federal Reserve Bank of San Francisco Mr. Kareken, Consultant, Federal Reserve Bank of Minneapolis By unanimous vote, the minutes of actions taken at the meeting of the Federal Open Market Committee held on January 9, 1968, were approved. The memorandum of discussion for the meeting of the Federal Open Market Committee held on January 9, 1968, was accepted. -3 2/6/68 By unanimous vote, the System open market transactions in foreign currencies during the period January 9 through February 5, 1968, 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 9 through February 5, 1968, 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 over-all economic activity has been expanding rapidly, with both industrial and consumer prices rising at a substantial rate, and that prospects are for continuing rapid growth and persisting inflationary pressures in the period ahead. The imbalance in U.S. international transactions worsened further in late 1967, primarily because of a sharp reduction in the surplus on merchandise trade. Although day-to-day money market rates have remained firm, rates on other short-term instruments have declined recently; meanwhile, long-term bond yields have fluctuated irregularly below the peaks reached late last year. Growth in bank credit resumed in January, reflecting both loan expansion around the year end and Treasury financing. The money supply expanded sharply following earlier slackening, but flows into time and savings accounts at bank and nonbank financial intermediaries have continued to moderate. In this situation, it is the policy of the Federal Open Market Committee to foster financial conditions conducive to resistance of inflationary pressures and progress toward reasonable equilibrium in the country's balance of payments. 2/6/68 To implement this policy, while taking account of Treasury financing activity, System open market opera tions until the next meeting of the Committee shall be conducted with a view to maintaining firm conditions in the money market, and operations shall be modified to the extent permitted by Treasury financing if bank credit appears to be expanding as rapidly as is currently projected. It was agreed that the next meeting of the Committee, which would be the annual organizational meeting, would be held on Tuesday, March 5, 1968, at 9:30 a.m. The meeting adjourned. Secretary