April 14, 1964 FOMC Minutes

FOMC minutes

understanding of the reasons for the Committee's day-to-day concern with the market. The Manager's report, which is focused on the money market, may stimulate some constructive academic interest in the field. During further consideration of the matter, it was noted that there had been included in the Board's Annual Report for 1963 the section of the Manager's report coastituting a review of operations. Question was raised whether chronological of the same material in the Federal Reserve Bulletin publication would therefore be warranted. As to the remainder of the Manager's report, some question as to the desirability of as a supplement to the New York Bank's Monthly publication, Review or otherwise also was raised. Chairman Martin suggested that After further discussion, until the next Committee meeting for the matter be held over decision. Thereupon the meeting adjourned. Assistant Secretary

Attachment A CONFIDENTIAL (FR) April 13, 1964 Draft current economic policy directives suggested for consideration by the Federal Open Market Committee at its meeting on April 14, Alternatives for First Paragraph Alternative A: It is the Federal Open Market Comm..ttee's current policy to accommodate moderate growth in the reseve base, bank credit and the money supply in order to facilitate the financing of further expansion of the economy and to foster further improve ment for the capital account of U. S. international payments, while seeking to avoid the emergence of inflationary pressures. this policy takes into account the expected progressive stimulus to domestic activity from the recent Federal income tax reduction and the increases projected for the year in business capital expenditures. It also gives consideration to the slower growth of aggregate bank reserves and the money supply in the first quarter of this year as compared with the fourth quarter of last year; the continued relative stability in average prices; the country's improved, though still unsettled, international and the advances in interest rates over past payments position; months in important markets abroad.

Alternative B: The Federal Open Market Committee notes that domestic economic activity continues to expand at a moderate pace with relative stability in average prices, and that the existing margin of unutilized resources will permit further expansion. It also notes that progressive stimulus to activity will be exerted over coming months by the recent reduction in Federal income tax rates and by the increases projected for the year in business capital expenditures. In addition, the Committee has taken account of the slower growth in aggregate bank reserves and the money supply in the first quarter of this year as com paired with the fourth quarter of last year; the further improvement in the economy's payments balance internationally; and the possibly adverse effects on the cap:.tal account of the payments balance arising from interest rate advances over past months in important markets abroad. In the light of these developments, it is the Committee's current policy to accommo date moderate growth in the reserve base, bank credit and the money supply in order to facilitate the financing of further expansion of the economy and to help sustain the improved position for the capital account of U. S. international payments, while seeking to avoid the emergence of inflationary pressures.

Alternatives for Second Paragraph Alternative A: To implement this policy, System open market operations for the next three weeks shall be conducted with a view to main taining about the same conditions in the money market as have prevailed on average since the Committee's last meeting, with weekly average free reserves generally in the range of $50 to $150 million, and Treasury bill rates adjusting daily to shifts in money market forces. However, money market conditions shall be permitted to ease or tighten, as necessary, to cushion any substantial and persistent change in the rate on three-month Treasury bills. The Committee believes tha. operations so conducted will be consistent with moderate upward trends in aggregate bank reserves, total bank credit, and the money supply. Alternative B: In the context of this general policy, System open market operations for the next three weeks shall be conducted with a view about the same conditions in the money market as to maintaining prevailed since the Committee's last meeting. The Committee have conducted will be consistent with expects that the operations so in aggregate bank reserves, total bank moderate upward trends credit, and the money supply.