Since late 1967 the Federal Reserve System has moved in the direction of a less expansionary monetary policy. The Federal Reserve Banks raised their discount rates from 4 per cent to 4 1/2 per cent in late November. At the December 12 meeting of the Federal Open Market Committee a decision was reached to move toward a modestly tighter open market policy. At this meeting the trading desk at the New York Federal Reserve Bank was given the directive that “System open market operations until the next meeting of the Committee shall be conducted with a view to moving slightly beyond the firmer conditions that have developed in the money market.” However, a proviso clause was added “that operations shall be modified as needed to moderate any apparently significant deviation of bank credit from current expectations or any unusual liquidity pressures.”