Page "learned" Paragraph 685

Open market policy

One of the most intriguing questions is whether the recent departures of the Federal Reserve authorities from confining their open market operations to Treasury bills will spread into longer-term Government securities in the next few months.

To the extent that the new Administration has its wishes, the Federal Reserve would conduct its open market operations throughout the entire maturity range of Government securities and aggressively seek to force down long-term interest rates.

The principle of `` bills only '', or `` bills preferably '', seems so strongly accepted by the Federal Reserve that it is difficult to envision conditions which would persuade the authorities to depart radically from it by extending their open market purchases regularly into long-term Government securities.

However, to the extent that the monetary authorities, in their effort to ease credit in the next several months, conduct their open market operations in longer-term Government bonds, they will certainly act to accentuate any tendency for long-term interest rates to ease as a result of market forces.