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Meeting of Federal Open Market Committee October 3, 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., on Tuesday, October 3, 1967, at 9:30 a.m. PRESENT: Mr. Hayes, Vice Chairman Mr. Brimmer Mr. Daane Mr. Francis Mr. Maisel Mr. Mitchell Mr. Robertson Mr. Scanlon Mr. Sherrill Mr. Swan Mr. Wayne 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. Kenyon, Assistant Secretary Mr. Broida, Assistant Secretary Mr. Molony, Assistant Secretary Mr. Hexter, Assistant General Counsel Mr. Brill, Economist Messrs. Baughman, Craven, Hersey, Koch, Partee, Parthemos, and Solomon, Associate Economists Mr. Holmes, Manager, System Open Market Account Mr. Coombs, Special Manager, System Open Market Account 10/3/67 -2 Mr. Fauver, Assistant to the Board of Governors Mr. Williams, Adviser, Division of Research and Statistics, Board of Governors Mr. Reynolds, Adviser, Division of International Finance, Board of Governors Mr. Axilrod, Associate Adviser, 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. Kimbrel, First Vice President, Federal Reserve Bank of Atlanta Messrs. Link, Melnicoff, Mann, Taylor, Andersen, Tow, and Green, Vice Presidents of the Federal Reserve Banks of New York, Philadelphia, Cleveland, Atlanta, St. Louis, Kansas City, and Dallas, respectively Mr. Anderson, Financial Economist, Federal Reserve Bank of Boston Mr. Duprey, Economist, Federal Reserve Bank of Minneapolis Mr. Deming, Manager, Securities Department, Federal Reserve Bank of New York By unanimous vote, James Parthemos was elected Associate Economist, effective immediately, in place of Benjamin U. Ratchford. By unanimous vote, the minutes of actions taken at the meeting of the Federal Open Market Committee held on September 12, 1967, were approved. The memorandum of discussion for the meeting of the Federal Open Market Committee held on September 12, 1967, was accepted. By unanimous vote, the System open market transactions in foreign currencies during the period September 12 through October 2, 1967, were approved, ratified, and confirmed. 10/3/67 By unanimous vote, renewal until December 29, 1967, of the $450 million standby swap arrangement with Bank of Italy, scheduled to mature on October 20, 1967, was approved, on the understanding that the arrangement would have a twelve-month term after December 29, 1967. By unanimous vote, the open market transactions in Government securities, agency obligations, and bankers' accep tances during the period September 12 through October 2, 1967, were approved, ratified, and confirmed. With Messrs. Francis and Scanlon 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 economic and financial developments reviewed at this meeting indicate that, apart from the effects of the strike in the automobile industry, underlying economic conditions have strengthened and prospects favor more rapid growth later in the year. Upward pressures on costs persist, average prices of industrial commodities have risen further, and the rate of increase in consumer prices remains high. While there recently have been large inflows of liquid funds from abroad through foreign branches of U.S. banks, the balance of payments continues to reflect a substantial under lying deficit. Bank credit expansion has continued large, although there was some moderation in September from the rapid July-August rate. The volume of corporate bond flota tions has slackened, but Federal and State and local Govern ment financing demands remain large and most interest rates have on balance moved up somewhat further. The President's new fiscal program is still pending before Congress. In this situation, it is the policy of the Federal Open Market 10/3/67 Committee to foster financial conditions, including bank credit growth, conducive to sustainable economic expansion, recognizing the need for reasonable price stability for both domestic and balance of payments purposes. To implement this policy, System open market operations until the next meeting of the Committee shall be conducted with a view to maintaining about the pre vailing conditions in the money market; but operations shall be modified, to the extent permitted by Treasury financing, to moderate any apparent tendency for bank credit to expand significantly more than currently expected. It was agreed that the next meeting of the Committee would be held on Tuesday, October 24, 1967, at 9:30 a.m. The meeting adjourned. Secretary
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