Full text of Federal Reserve Bank of New York Circulars : 6822. Statement of President's Committee on Interest and Dividends

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F E D E R AL R E S E R V E BANK
O F N E W YORK

D

a

C ir cu la r N o . 6822
O c to b e r 2 1 , 1971

STATEMENT OF PRESIDENT'S COMMITTEE ON INTEREST AND DIVIDENDS

To A ll Banks and Other Financial Institutions
in the Second Federal R eserv e D istrict:

Following is the text of a statement issued yesterday by the Committee on Interest and
Dividends, recently established by the President as part of his stabilization program structure:
The Committee on Interest and Dividends announced today that it expects all lenders
to assemble and keep on file their schedule of lending rates on August 15 and thereafter.
The Committee also announced that its attention in the near future will be focused
mainly on interest rates closely affecting American fam ilies.
In the Committee’ s judgment, inflationary expectations have moderated since the
inception of the program announced by the President on August 15. Market rates of
interest have declined in recent weeks in part because lenders no longer require as
large an inflationary premium as they did earlier. The Committee anticipates that other
interest rates will follow this pattern in the months ahead. The Committee welcomes
the reduction of the prime rate announced today by many commercial banks.
However, the Committee pointed out that there may be fluctuations in the level and
structure of rates from time to time, reflecting changes in the demand for and supply
of funds.
The restraint on dividend payments will continue as previously requested by the
Secretary of Commerce and as set forth in Cost of Living Council guidelines. Policy
questions with regard to dividends are now under consideration by the Committee. An­
nouncements on these matters will be made in due course.
In view of the demonstrated willingness of financial and other business organizations
to cooperate with the President's program, the Committee is confident that appropriate
restraint on interest rates and dividends can be achieved on a voluntary b asis. The
Committee will maintain close surveillance of developments.




A lfr e d H ayes,
P re sid e n t.