August 1, 1958 FOMC Minutes

FOMC minutes

A meeting of the Federal Open Market Committee was held on Friday, August 1, 1958, at 11:00 a.m. This was a telephone conference meeting and each individual was in Washington except as otherwise indicated in parentheses in the following list of those participating: PRESENT: Mr. Balderston, presiding Mr. Irons (Dallas) Mr. Leach (Richmond) Mr. Mangels (San Francisco) Mr. Mills Mr. Robertson Mr. Treiber, Alternate for Mr. Hayes (New York) Mr. Riefler, Secretary Mr. Thurston, Assistant Secretary Mr. Solomon, Assistant General Counsel Mr. Young, Associate Economist Mr. Rouse, Manager, System Open Market Account (New York) Mr. Molony, Special Assistant to the Board of Governors Mr. Kenyon, Assistant Secretary, Board of Governors Mr. Koch, Associate Adviser, Division of Research and Statistics, Board of Governors Mr. Keir, Acting Chief, Government Finance Section, Division of Research and Statistics, Board of Governors Mr. Marsh, Assistant Vice President, Federal Reserve Bank of New York (New York) Messrs. Gaines and Stone, Managers, Securities Department, Federal Reserve Bank of New York (New York) Mr. Marsh reported that there was a very quiet situation in the Government securities market. Prices were a shade lower on some of the to the movement. Neither was issues, but there was no follow through reaction to the Treasury's announcement of a 59 there any particular

per cent allotment on the new issue of tax anticipation certifi cates, an announcement which could have been somewhat disturbing since some banks no doubt got more of the certificates than they had expected. However, the announcement apparently was taken in stride and the Account Management did not expect to hear much more of the matter. Mr. Marsh said that nothing of significance was developing in the other securities markets, which were quite firm. The money market was again easy, and it might be expected that the money mar ket would continue easy in view of the money that it would get from the System purchases of when-issued certificates for delivery today. the basic deficit in reserves that the New York City For that reason night should be reversed and there should be no banks showed last market. Yesterday's figure of net tightness at all in the money million reflected sales of $228.5 million borrowed reserves of $116 for cash delivery yesterday. out of the System Account of bills free reserves of for today was net York Bank's projection The New August 6, the pro For the week ending Wednesday, $878 million. $647 million, and free reserves of about jection showed average that average free week it was expected the following statement The Treasury balance to about $260 million. reserves would fall expected to remain the balance was $617 million, and last night was

around the $600 million level until next Tuesday when it would drop closer to the normal $500 million level. Previously, it had been expected that the balance would stay around the $700 million level, since the Treasury had indicated a willingness to keep it there, but at any rate it now looked as though the balance would remain in the neighborhood of $600 million until next Tuesday at least. Mr. Marsh stated that the program for today is to sell Treasury bills. The bill market was in good shape and it should be possible to sell some more bills from the Account. At the moment the thinking was in terms of starting out with sales of $100 or $125 million, with further action depending on the demand. The dealers' position in bills Wednesday night was $199 million, last night. Since sales from the System and $77 million higher including $228.5 million totaled $253 million yesterday, Account for regular delivery, the for cash delivery and the remainder of bills yesterday. Therefore, sold a substantial amount dealers the Account would have no qualms about selling the Management of some more today. stated that they were very Messrs. Robertson and Balderston Mr. Irons stated that continuing to sell bills. much in favor of take, and Messrs. as the market would to sell as many he would like Leach expressed agreement. Mangels and

Mr. Marsh said that there was agreement at the New York comments and that, if there were no further Bank with those would go to work on the bill sales. questions, the Desk there would be no telephone conference It was stated that in the absence of unexpected the Committee Monday morning meeting of market developments. The meeting then adjourned. Secretary