The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
Meeting of Federal Open Market Committee
October 7, 1969
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 7, 1969, at 9:30 a.m.
PRESENT:
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Martin, Chairman
Hayes, Vice Chairman
Bopp
Brimmer
Clay
Coldwell
Daane
Maisel
Mitchell
Robertson
Scanlon
Sherrill
Messrs. Francis, Heflin, Hickman,1/ and Swan,
Alternate Members of the Federal Open
Market Committee
Messrs. Morris, Kimbrel, and Galusha, Presidents
of the Federal Reserve Banks of Boston,
Atlanta, and Minneapolis, respectively
Mr. Holland, Secretary
Mr. Broida, Deputy Secretary
Messrs. Kenyon and Molony, Assistant
Secretaries
Mr. Hackley, General Counsel
Mr. Partee, Economist
Messrs. Axilrod, Baughman, Eastburn, Gramley,
Green, Hersey, Solomon, and Tow,
Associate Economists
Mr. Holmes, Manager, System Open Market
Account
1/
Entered the meeting at point indicated.
10/7/69
Mr. Cardon, Assistant to the Board of
Governors
Messrs. Coyne and Nichols, Special
Assistants to the Board of
Governors
Messrs. Keir and Wernick, Associate
Advisers, Division of Research and
Statistics, Board of Governors
Mr. Weiner, Assistant Adviser, Division
of Research and Statistics, Board
of Governors
Mr. Bernard, Special Assistant, Office
of the Secretary, Board of Governors
Mr. Wendel, Chief, Government Finance
Section, Division of Research and
Statistics, Board of Governors
Miss Eaton, Open Market Secretariat
Assistant, Office of the Secretary,
Board of Governors
Messrs. Eisenmenger, Parthemos, Jones,
and Craven, Senior Vice Presidents
of the Federal Reserve Banks of
Boston, Richmond, St. Louis, and
San Francisco, respectively
Messrs. Hocter and Brandt, Vice Presidents
of the Federal Reserve Banks of Cleveland
and Atlanta, respectively
Mr. Kareken, Economic Adviser, Federal Reserve
Bank of Minneapolis
Mr. Bodner, Assistant Vice President, Federal
Reserve Bank of New York
Mr. Davis, Adviser, Federal Reserve Bank
of New York
Mr. Cooper, Manager, Securities and
Acceptance Departments, Federal
Reserve Bank of New York
By unanimous vote, the minutes of actions taken at the meet
ing of the Federal Open Market Committee held on September 9, 1969,
were approved.
The memorandum of discussion for the meeting of the Federal
Open Market Committee held on September 9, 1969, was accepted.
10/7/69
By unanimous vote, the System open market transactions in
foreign currencies during the period September 9 through October 6,
1969, were approved, ratified, and confirmed.
Mr. Hickman entered the meeting.
By unanimous vote, increases of $100 million each, from
$100 million to $200 million, in the swap arrangements with the
Austrian National Bank, the National Bank of Denmark, and the Bank
of Norway, together with the conforming amendments to paragraph 2
of the Authorization for System foreign currency operations, were
approved, effective immediately.
As amended, 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
Amount of
arrangement
(millions of
dollars equivalent)
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
200
500
1,000
200
2,000
1,000
1,000
1,000
1,000
130
300
10/7/69
Amount of
Foreign bank
Bank of Norway
Bank of Sweden
Swiss National Bank
Bank for International Settlements:
Dollars against Swiss francs
Dollars against authorized European
currencies other than Swiss francs
arrangement
(millions of
dollars equivalent)
200
250
600
600
1,000
By unanimous vote, paragraph 2 of the continuing authority
directive was amended to read as follows:
The Federal Open Market Committee authorizes and
directs the Federal Reserve Bank of New York to purchase
directly from the Treasury for the account of the Federal
Reserve Bank of New York, or, if the New York Reserve Bank
is closed, any other Reserve Bank for its own account
(with discretion, in cases where it seems desirable, to
issue participations to one or more Federal Reserve Banks)
such amounts of special short-term certificates of indebt
edness as may be necessary from time to time for the
temporary accommodation of the Treasury; provided that
the rate charged on such certificates shall be a rate
1/4 of 1 per cent below the discount rate of the Federal
Reserve Bank of New York at the time of such purchases,
and provided further that the total amount of such
certificates held at any one time by the Federal Reserve
Banks shall not exceed $1 billion.
By unanimous vote, the open market transactions in Government
securities, agency obligations, and bankers' acceptances during the
period September 9 through October 6, 1969, were approved, ratified,
and confirmed.
With Mr. Maisel 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:
10/7/69
The information reviewed at this meeting suggests
that the pace of expansion in real economic activity was
sustained in the third quarter by an acceleration of
inventory investment, which about offset a further slack
ening in growth of private final sales. Some monthly
economic measures have weakened recently, and slower
over-all growth is projected for the fourth quarter
Substantial upward pressures on prices and costs are
persisting. Most market interest rates recently have
risen to new highs as demands for funds have pressed
against limited supplies. In September, on average,
the money supply changed little as U.S. Government
deposits rose considerably further, and bank credit
increased slightly after 2 months of substantial
decline. The outstanding volume of large-denomination
CD's decreased further in September, and flows of con
sumer-type time and savings funds at banks and nonbank
thrift institutions appear to have remained relatively
weak. The U.S. foreign trade surplus increased a little
in August. In August and September the deficit in the
over-all balance of payments on the liquidity basis was
very large, although not as large as in preceding months;
and the official settlements balance, which had been in
surplus for more than a year, shifted into deficit,
reflecting slackened Euro-dollar borrowing by U.S. banks
and new speculative flows into Germany. Exchange market
tensions were reduced somewhat when the German Government
decided to cease temporarily official sales of marks,
after which the exchange rate for that currency rose
above the official parity. In light of the foregoing
developments, it is the policy of the Federal Open Market
Committee to foster financial conditions conducive to the
reduction of inflationary pressures, with a view to
encouraging sustainable economic growth and attaining
reasonable equilibrium in the country's balance of
payments.
To implement this policy, System open market
operations until the next meeting of the Committee
shall be conducted with a view to maintaining the
prevailing firm conditions in money and short-term
credit markets; provided, however, that operations
shall be modified if bank credit appears to be
deviating significantly from current projections.
By unanimous vote, the continuing authority directive was
amended by the addition of the following paragraph 3:
10/7/69
In order to insure the effective conduct of open
market operations, the Federal Open Market Committee
authorizes and directs the Federal Reserve Banks to
lend U.S. Government securities held in the System
Open Market Account to Government securities dealers
and to banks participating in Government securities
clearing arrangements conducted through a Federal
Reserve Bank, under such instructions as the Committee
may specify from time to time.
It was agreed that the next meeting of the Committee would
be held on Tuesday, October 28, 1969, at 9:30 a.m.
The meeting adjourned.
Secretary
@FedFRASER