May 23, 1967 FOMC Minutes

FOMC minutes

Mr. Maisel said he thought a 60-day lag probably would be preferable, but he would be willing to start with a 90-day lag and consider shortening it later since it would be far easier to shorten to 60 days than it would be to extend the delay if the initial choice turned out to be inappropriate. Mr. Mitchell observed that in his judgment a 60-day lag probably would be adequate in the great majority of cases. However, since a 90-day lag might be desirable occasionally, he would prefer that the longer lag be used on a regular basis. Messrs. Brimmer and Daane commented that they felt strongly that the lag should be 90 days. Mr. Brimmer then asked if the Manager would comment on the question. Mr. Holmes said he agreed with Mr. Mitchell that a 60-day lag for releasing the policy directive might ordinarily not be damaging, but that a 90-day lag might be preferable for the reason Mr. Mitchell had mentioned. Chairman Martin then commented that the question of the sufficiently important to warrant more appropriate time lag seemed study. Accordingly, he proposed that the Committee defer a decision next meeting. It was unfortunate that Mr. Daane on it until its would not be present at that meeting, but if he so desired he could distribute a written statement of his views in advance.

Mr. Wayne noted that Mr. Hackley had made certain recommen dations which appeared to be noncontroversial, and on which the Committee might act today. One such was the recommendation that the Committee's minutes be divided into action minutes and records of discussion. Chairman Martin asked whether there was any objection to approving Mr. Hackley's recommendation concerning the minutes, and none was heard. Mr. Hackley asked whether the Committee was prepared to approve the draft of new Rules regarding the availability of information on a tentative basis. Mr. Treiber remarked that any such approval presumably would be in principle, with the language of the Rules subject to any changes of detail that might be found desirable after further study. Chairman Martin said it appeared that the Committee was prepared to approve the draft rules on that basis. The Chairman then remarked that the Committee obviously had some difficult decisions to make in connection with the Freedom of Information would reiterate his hope that it would not get into a Act, but he of seeming to be reluctant to release information to the position had been made in recent years in public. A great deal of progress was not trying to operate in total demonstrating that the Committee

secrecy. In cases where secrecy was important it should be preserved, but those who favored more disclosure had a good deal of support and he thought the System would be better off if it furnished as much information as possible. The Chairman then suggested that in view of the hour the Committee postpone discussion of the final item on the agenda, relating to policy on information regarding swap drawings and other System foreign currency operations. was no disagreement with the Chairman's suggestion. There the next meeting of the Committee would be It was agreed held on Tuesday, June 20, 1967, at 9:30 a.m. Thereupon the meeting adjourned. Secretary

ATTACHMENT A CONFIDENTIAL (FR) May 22, 1967 Drafts of Current Economic Policy Directive for Consideration by the Federal Open Market Committee at its Meeting on May 23, FIRST PARAGRAPH The economic and financial developments reviewed at this meeting suggest that renewed economic expansion is in prospect. Output is still being retarded by adjustments of excessive invento ries, but growth in aggregate final demands continues strong. Average wholesale prices have declined recently, but unit labor costs in manufacturing have risen further. Bank credit expansion has slowed in recent weeks from its earlier rapid rate. Long-term interest rates have continued to rise under the influence of heavy securities market financing, but short-term yields have declined further. Some further reductions have been made in foreign central bank discount rates. The balance of payments deficit has remained substantial despite some improvement in the foreign trade surplus. In this situation, it is the Federal Open Market Committee's policy to foster money and credit conditions, including bank credit growth, conducive to renewed economic expansion, while recognizing the need toward reasonable equilibrium in the country's balance for progress of payments. SECOND PARAGRAPH Alternative A this policy, System open market operations To implement Committee shall be conducted with a until the next meeting of the view to maintaining the prevailing conditions in the money market, as necessary to moderate any but operations shall be modified of bank credit from current ex apparently significant deviations pectations. Alternative B System open market operations To implement this policy, be conducted with a of the Committee shall until the next meeting the prevailing conditions in the money market, view to maintaining market insofar as pressures in the capital while moderating practicable.