A Note: Has Federal Reserve Policy Changed?

Acceleration in the rate of growth of the U. S. money supply occurred during 1965 and the first half of 1966. This increase was made possible by open market operations of the Federal Reserve Board which augmented bank reserves during a period of unusually buoyant demand for bank loans. This process continued despite widespread concern over inflationary pressures within the economy, and amid repeated calls by Federal Reserve officials for a tax increase to combat inflation. The contrast between this recent behavior and its contraction of bank reserves in 1959-60 suggests that a basic alteration may have occurred in Federal Reserve policy.