January 10, 1967 FOMC Minutes

FOMC minutes

The Chairman then suggested that the Committee vote on a directive consisting of the staff's draft for the first paragraph and alternative B for the second paragraph. Thereupon, upon motion duly made and seconded, and with Messrs. Irons, Shepardson, and Treiber dissenting, the Federal Reserve Bank of New York was authorized and directed, until otherwise directed by the Committee, to execute transactions in the System Account in accordance with the following current economic policy directive: The economic and financial developments reviewed at this meeting indicate further moderation in various expansionary forces and sharply increased inventory accumulation. The pace of advance of broad price measures has slowed, although upward price and cost pressures persist for many finished goods and services. Partly reflecting the recent modification of monetary policy, financial market conditions have become less taut than earlier and bank credit expansion has resumed. With respect to the balance of payments, trends in international transactions indicate a continuing serious problem. In this situation, it is the Federal Open policy to foster money and credit Market Committee's conditions conducive to noninflationary economic expansion and progress toward reasonable equilibrium in the country's balance of payments. To implement this policy, and taking account of forthcoming Treasury financing, System open market opera tions until the next meeting of the Committee shall be with a view to attaining somewhat easier conducted in the money market, unless bank credit appears conditions to be expanding significantly faster than currently anticipated.

It was agreed that the next meeting of the Committee would be held on Tuesday, February 7, 1967, at 9:30 a.m. Thereupon the meeting adjourned. Secretary

ATTACHMENT A CONFIDENTIAL (FR) January 9, 1967 Drafts of Current Economic Policy Directive for Consideration by the Federal Open Market Committee at its Meeting on January 10, FIRST PARAGRAPH The economic and financial developments reviewed at this meeting indicate further moderation in various expansionary forces and sharply increased inventory accumulation. The pace of advance of broad price measures has slowed, although upward price and cost pressures persist for many finished goods and services. Partly reflecting the recent modification of monetary policy, financial market conditions have become less taut than earlier and bank credit expansion has resumed. With respect to the balance of payments, trends in international transactions indicate a continuing serious problem. In this situation, it is the Federal Open Market Committee's policy to foster money and credit conditions conducive to noninflationary economic expansion and progress toward reasonable equilibrium in the country's balance of payments. SECOND PARAGRAPH Alternative A: To implement this policy, and taking account of forthcoming Treasury financing, System open market operations until the next meeting of the Committee shall be conducted with a view to maintaining about the currently prevailing conditions in the money market, but operations shall be modified as necessary to moderate any apparently significant deviation of bank credit from current expectations. Alternative B: To implement this policy, and taking account of forthcoming Treasury financing, System open market operations until the next meeting of the Committee shall be conducted with a view to attaining somewhat easier conditions in the money market, unless bank credit appears to be expanding significantly faster than currently antic ipated. Alternative C: To implement this policy, and taking account of forthcoming Treasury financing, System open market operations until the next

meeting of the Committee shall be conducted with a view to fostering expansion in bank credit at a moderate rate, but operations shall be modified as necessary to limit any sharp easing or firming of money market conditions.