March 1, 1960 FOMC Minutes

FOMC minutes

With respect to the statement of continuing operating policies, the consensus that developed from this meeting was favorable to reviewing the matter, but it was evident from the discussion that careful thought and full discussion would be re quired before any change was made. Accordingly, it was agreed that the existing statement of operating policies would be con tinued on a temporary basis, with the understanding that the question would be brought up again for discussion as soon as the members of the Committee had had an opportunity to develop their thinking further, especially in the light of whatever conclusions might be reached on the Treasury's suggestions mentioned below. With regard to suggestions by the Treasury that the Com mittee might provide some assistance in connection with two forthcoming refinancings, two staff memoranda (one prepared by Mr. Keir of the Board's staff under date of February 26, 1960, and the other prepared by the Securities Department of the Federal under date of February 29, 1960) were Reserve Bank of New York to the staff committee consisting of Messrs. Young, referred at the next further study and recommendation and Rouse for Thomas, meeting of the Committee. it was under format of the directive, respect to the With at this time but that the matter stood that no change would be made with the study of the given further study in connection would be policies. It was unanimously of continuing operating statement

agreed, however, that a modification of the wording of clause (b) of the first paragraph of the Committee's directive was called for at this time, and that operations for the System Account should be with a view, among other things, "to fostering sustainable growth in economic activity and employment while guarding against excessive credit expansion." Thereupon, upon motion duly made and seconded, the Committee voted unanimously to direct the Federal Re serve Bank of New York until otherwise directed by the Committee: (1) To make such purchases, sales, or exchanges (including replacement of maturing securities, and allowing maturities to run off without replacement) for the System Open Market Account in the open market or, in the case of maturing securities, by direct exchange with the Treasury, as may be necessary in the light of current and prospective economic conditions and the general credit situation of the country, with a view (a) to relating the supply of funds in the market to the needs of commerce and business, (b) to fostering sustainable growth in economic activity and employment while guarding against excessive credit expansion, and (c) to the practical administration of the Account; provided that the aggregate amount of securities held in the System Account (including commitments for the purchase or sale of securities for the Account) at the of this date, other than special short-term close certificates of indebtedness purchased from time to time for the temporary accommodation of the Treasury, shall not be increased or decreased by more than $1 billion; the Treasury for the purchase direct from (2) To account of the Federal Reserve Bank of New York (with seems desirable, to issue in cases where it discretion, one or more Federal Reserve Banks) participations to certificates of amounts of special short-term such from time to time as may be necessary indebtedness

for the temporary accommodation of the Treasury; provided that the total amount of such certificates held at any one time by the Federal Reserve Banks shall not exceed in the aggregate $500 million. It was agreed that the next meeting of the Federal Open Market Comittee would be held on Tuesday, March 22, 1960, at 10:00 a.m. Thereupon the meeting adjourned. Secretary

RESERVE TARGET FOR MARCH USING TOTAL RESERVES (Daily average figures---000,000 omitted) (1) March growth amount 1/ (at 2% annual rate) $ 31 (2) Target for February $ 18,585 - February 18,188 $ 18,188 (3) Actual reserves (4) Shortage in reserves from February target $ 397 397 (5) Add normal increase in reserves between February and March $ 18,225 18,225 (6) Target for March $ 18,653 (7) March target range for practical administration of account 18,603 to 18,703 1/ March growth amount at 3 percent annually would be $47.0 million, at 4 percent annually would be $62 million. I§