Credit Control Revocation Announcement of Actions by the President and the Federal Reserve System.

The Federal Reserve acted today to remove the special restraints on credit initiated last March as part of the President's anti-inflation program. President Carter is heartened by the success of the selective credit restraints in rapidly bringing about conditions in financial markets helping to reduce inflationary pressures and lower interest rates.

Speculative activities in financial and commodity markets have moderated substantially, signaling an easing of credit demands and a reversal of inflationary expectations. Business use of credit has declined. Households generally have cut back on credit-financed spending and increased the proportion of their income going into savings. Interest rates have fallen dramatically, thus sharply reducing costs of credit for productive investment. These shifts in financial trends have occurred in an environment of continued moderation in growth of the money stock that is essential to the longrun task of restraining inflation.

The President is today removing the authority granted the Federal Reserve last March under the Credit Control Act, except for the continued authorization necessary for an orderly termination of the program.

The action of the Federal Reserve to remove the selective constraints on consumer credit has been made possible precisely because those controls have accomplished their purpose. Consumer and other forms of credit are no longer being used excessively.

The removal of the controls, however, should not be taken as a signal for the resumption of a profligate use of credit by consumers or by business. The President retains his authority under the Credit Control Act of 1969. The administration will monitor credit developments carefully, and should an excessive use of credit reemerge under circumstances which again call for the use of that authority, the President is prepared to invoke it.