October 22, 1963 FOMC Minutes

FOMC minutes

first alternative differed from the one issued at the previous meeting only by the addition of a reference to the imminent Treasury financing, and continued to call for operations to be conducted with "a view to maintaining the prevailing degree of firmness in the money market...." The second alternative also included the Treasury financing reference, but substituted the wording "the degree of firmness in the money market that has prevailed in recent weeks" for the earlier wording. of the discussion, it became evident that the In the course Committee unanimously favored the third of the proposed alternatives for the first paragraph. It was agreed that the change in language was intended simply to reflect recent developments in the domestic economy and in the balance of payments and not to signify any change in policy. differences of views, however, as to which of the There were two proposed alternatives for the second paragraph better reflected the Committee's consensus for no change in policy. Mr. Mitchell expressed a preference for the second alternative, on grounds of both substance and degree of clarity. He felt that the word "prevailing" by itself could mean either prevailing in recent weeks or at the time of this meeting, and since he believed the former was the Committee's intent, it desirable to be explicit on the point. Messrs. Hayes he considered in favor of the first alternative. Mr. Hayes found and Shepardson spoke recent weeks" ambiguous since the number of weeks was the phrase "in mean the last three weeks, he thought the not .specified. If taken to

substance of the second alternative was the same as the first; but if taken to apply to a longer period, he felt it would imply that the Committee wanted to back off from the degree of firmness that had been achieved, and he did not think this was the case. Mr. Shepardson "prevailing" was perfectly explicit to him; it meant said the word prevailing at the time of the meeting. Chairman Martin observed that, while others might feel differently, to his mind there was no substantive difference between the alternatives. The problem, as he saw it, was a semantic one of a type the Committee had to struggle with continually. He suggested Committee members be polled on their preference, on the that the the two alternatives were substantially equivalent in assumption that the poll indicated that a majority preferred meaning. The results of the second alternative. upon motion duly made and Thereupon, the Federal Reserve Bank of New seconded, was authorized and directed, until York otherwise directed by the Committee, to execute transactions in the System Account accordance with the following current in economic policy directive: Open Market Committee's current policy It is the Federal growth in bank credit, while mainto accommodate moderate the money market that would contribute taining conditions in account of the U. S. continued improvement in the capital to This policy takes into consideration balance of payments. economic activity is expanding the fact that domestic of underutilized resources; although with a margin further, position is still that the balance of payments and the fact deficits. It also despite a tendency to reduced adverse in bank credit, money supply, and recognizes the increases reserve base of recent months. the

To implement this policy, and taking into account the imminent Treasury refinancing, System open market operations shall be conducted with a view to maintaining the degree of firmness in the money market that has prevailed in recent accommodating moderate expansion in aggregate weeks, while bank reserves. Votes for this action: Messrs. Martin, Hayes, Balderston, Bopp, Clay, Mills, Mitchell, Robertson, Scanlon, Shepardson, and Shuford. Votes against this action: None. Martin noted the Account Manager's earlier suggestion Chairman that the continuing authority directive be left unchanged for another three weeks with respect to the limitation of $1.5 billion for changes amount of U. S. Government securities held in the in the aggregate during any period between meetings of the System Open Market Account was made to leaving this directive unchanged. Committee. No objection suggested that in view of the lateness of the The Chairman once again hold over until the next meeting its hour the Committee on the question of making available discussion of the memorandum minutes of the Federal Open Market Committee for some past period of scholars and others, and there was no objection. for use there were distributed copies of a list of At this point possible dates for meetings of the Committee through 1964 for by the members of the Committee. consideration next meeting of the Federal Open Market It was agreed that the would be held on November 12, 1963. Committee

The meeting then adjourned. Secretary