The Federal Reserve's policymaking group, concerned about the shock to the economy from the stock price plunge, held daily telephone meetings on the situation from Oct. 19 through Oct. 30, according to minutes released yesterday.
The Federal Open Market Committee agreed "on the need for special flexibility in open market operations" during this period.
While the minutes do not explain what "special flexibility" meant, the Fed has moved aggressively since Oct. 19 to lower interest rates and ensure that the banking system had sufficient funds to weather the stock market crisis.
Federal Reserve policymakers were tightening up on credit conditions in the weeks before last month's big stock market dive, according to minutes released yesterday.
The update on the actions of the Fed was contained in an addendum to the minutes of the FOMC's Sept. 22 meeting, at which members voted unanimously to place slightly tighter controls on money growth because of concerns about inflation.
Minutes of that meeting said Fed officials voted to maintain "the slightly firmer degree of reserve pressure that had been sought in recent weeks."
That credit tightening move, originally signaled by an increase in the Fed's discount rate Sept. 4, has been cited by some as a contributing factor to the record 508-point drop in the stock market Oct. 19.
The central bank on Sept. 4 voted to boost the discount rate from 5.5 percent to 6 percent. It was the first increase in the discount rate in three years and came against a backdrop of rising investor concern over inflation, spurred in part by declines in the value of the dollar.
The Open Market Committee, which includes Fed board members and presidents of Federal Reserve banks, meets eight times a year to review monetary policies.
The decisions made by the committee are implemented by open-market sales and purchases of government securities. By buying securities, the Fed increases the amount of money the banks have available to loan to customers.