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Meeting of Federal Open Market Committee
July 18, 1967
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.,
PRESENT:
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
on Tuesday, July 18, 1967, at 9:30 a.m.
Hayes, Vice Chairman, presiding
Brimmer
Maisel
Mitchell
Robertson
Scanlon
Sherrill
Swan
Wayne
Patterson, Alternate for Mr. Francis
Messrs. Ellis, Hickman, and Galusha, Alternate
Members of the Federal Open Market Committee
Messrs. Bopp, Clay, and Irons, Presidents of
the Federal Reserve Banks of Philadelphia,
Kansas City, and Dallas, respectively
Mr. Holland, Secretary
Mr. Sherman, Assistant Secretary
Mr. Kenyon, Assistant Secretary
Mr. Molony, Assistant Secretary
Mr. Hackley, General Counsel
Messrs. Baughman, Craven, Garvy, Hersey,
Jones, Koch, Partee, and Ratchford,
Associate Economists
Mr. Holmes, Manager, System Open Market Account
Mr. Coombs, Special Manager, System Open Market
Account
Mr. Cardon, Legislative Counsel, Board of
Governors
Mr. Fauver, Assistant to the Board of Governors
7/18/67
Mr. Williams, Adviser, Division of Research
and Statistics, Board of Governors
Mr. Axilrod, Associate Adviser, Division of
Research and Statistics, Board of
Governors
Mr. Bernard, Economist, Government Finance
Section, Division of Research and
Statistics, 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. Lewis, First Vice President, Federal Reserve
Bank of St. Louis
Messrs. Eisenmenger, Eastburn, Mann, Brandt,
Tow, and Green, Vice Presidents of the
Federal Reserve Banks of Boston,
Philadelphia, Cleveland, Atlanta, Kansas
City, and Dallas, respectively
Mr. Deming, Manager, Securities Department,
Federal Reserve Bank of New York
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 June 20, 1967, were
approved.
The memorandum of discussion for the meeting of the Federal
Open Market Committee held on June 20, 1967, was accepted.
By unanimous vote, the action of members of the Federal
Open Market Committee on June 29, 1967, approving an amendment to
paragraph 2 of the Committee's Authorization for System Foreign
Currency Operations, effective June 30, 1967, to change the maximum
period authorized for the reciprocal currency arrangement with the
Netherlands Bank from 3 months to 6 months, was ratified.
7/18/67
-3
By unanimous vote, paragraph 2 of the Authorization for
System Foreign Currency Operations was amended, effective immediately,
to delete therefrom the column headed "Maximum period of arrange
ment (months)" and to incorporate in the text of the paragraph
provision for the Federal Reserve Bank of New York to maintain
reciprocal currency arrangements with specified foreign banks for
periods up to a maximum of 12 months.
By unanimous vote, the System open market transactions in
foreign currencies during the period June 20 through July 17, 1967,
were approved, ratified, and confirmed.
By unanimous vote, increases of $50 million each, from $200
million to $250 million, in the swap arrangements with the Swiss
National Bank and the Bank for International Settlements (System
drawings in Swiss francs) were approved.
By unanimous vote, an increase from $200 million to $300
million in the swap arrangement with the Bank for International
Settlements involving System drawings in authorized European cur
rencies other than Swiss francs was approved.
In consequence of the foregoing actions authorizing increases
in the swap arrangements with the Swiss National Bank and the Bank for
International Settlements, there was also approved by unanimous vote,
effective immediately, the necessary amendment to paragraph 2 of the
Authorization for System Foreign Currency Operations.
With this
7/18/67
and other amendments approved at this meeting, the paragraph read
as follows:
The Federal Open Market Committee directs the
Federal Reserve Bank of New York to maintain reciprocal
currency arrangements ("swap" arrangements) for System
Open Market Account for periods up to a maximum of 12
months with the following foreign banks, which are among
those designated by the Board of Governors of the Federal
Reserve System under Section 214.5 of Regulation N,
Relations with Foreign Banks and Bankers, and with the
approval of the Committee to renew such arrangements on
maturity:
Foreign bank
Austrian National Bank
National Bank of Belgium
Bank of Canada
National Bank of Denmark
Bank of England
Bank of France
German Federal Bank
Bank of Italy
Bank of Japan
Bank of Mexico
Netherlands Bank
Bank of Norway
Bank of Sweden
Swiss National Bank
Bank for International Settlements
System drawings in Swiss francs
System drawings in authorized European
currencies other than Swiss francs
Amount of
arrangement
(millions of
dollars equivalent)
100
150
500
100
1,350
100
400
600
450
130
150
100
100
250
250
300
By unanimous vote, the renewal, on their existing maturity
basis, of the following swap arrangements, which were to mature on
the dates indicated, was approved:
7/18/67
-5
Foreign bank
Bank of Sweden
Swiss National Bank
Bank for International Settlements
System drawings in Swiss francs
System drawings in authorized European
currencies other than Swiss francs
Austrian National Bank
Bank of Japan
German Federal Bank
Bank of France
Maturity of
latest authorized
renewal
July 19, 1967
July 20, 1967
July 20, 1967
July 20,
July 26,
July 28,
August 9,
August 10,
1967
1967
1967
1967
1967
With Mr. Mitchell dissenting, the Special Manager of the
System Open Market Account was authorized to explore the possibility
of placing all of the System's swap arrangements on a 12-month basis,
with maturities at year end.
By unanimous vote, the open market transactions in Government
securities, agency obligations, and bankers' acceptances during the
period June 20 through July 17, 1967, were approved, ratified, and
confirmed.
With Messrs. Brimmer, Maisel, and Mitchell dissenting, the
Committee decided to omit from the current economic policy directive
to be issued at this meeting the reference to utilization of opera
tions in coupon issues in supplying part of reserve needs that had
appeared in the directives issued at the meetings on May 23 and
June 20, 1967.
By unanimous vote, the Federal Reserve Bank of New York was
authorized and directed, until otherwise directed by the Committee,
7/18/67
to execute transactions in the System Open Market Account in
accordance with the following current economic policy directive:
The economic and financial developments reviewed
at this meeting indicate that economic activity has been
rising modestly and that prospects are for further
expansion. Output is still being retarded by adjustments
of excessive inventories, but growth in final demands
continues strong, reflecting some strengthening in con
sumer expenditures for durable goods and housing, and
also further increases in Government outlays. The over
all indexes of both wholesale and retail prices have
risen further, although wholesale prices of industrial
commodities have remained stable. Bank credit expansion
has been large in recent weeks. Most short- and long-term
interest rates, after reaching advanced levels under the
influence of heavy public and private securities market
financing, have declined somewhat recently. The balance
of payments deficit has remained substantial despite
some improvement in the foreign trade surplus. In this
situation, it is the Federal Open Market Committee's
policy to foster money and credit conditions, including
bank credit growth, conducive to continuing economic
expansion, while recognizing the need for reasonable
price stability for both domestic and balance of
payments purposes.
To implement this policy, while taking account of
forthcoming Treasury financing activity, System open
market operations until the next meeting of the Committee
shall be conducted with a view to maintaining about the
prevailing conditions in the money market; but operations
shall be modified insofar as the Treasury financing permits
to moderate any apparent tendency for bank credit and
money to expand more than currently expected.
It was agreed that the next meeting of the Federal Open Market
Committee would be held on Tuesday, August 15, 1967, at 9:30 a.m.
The meeting adjourned.
Secretary
@FedFRASER