[Federal Register Volume 60, Number 6 (Tuesday, January 10, 1995)]
[Notices]
[Pages 2599-2600]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-531]
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FEDERAL RESERVE SYSTEM
Federal Open Market Committee; Domestic Policy Directive of
November 15, 1994
In accordance with Sec. 271.5 of its rules regarding availability
of information (12 CFR part 271), there is set forth below the domestic
policy directive issued by the Federal Open Market Committee at its
meeting held on November 15, 1994.\1\ The directive was issued to the
Federal Reserve Bank of New York as follows:
\1\ Copies of the Minutes of the Federal Open Market Committee
meeting of November 15, 1994, which include the domestic policy
directive issued at that meeting, are available upon request to the
Board of Governors of the Federal Reserve System, Washington, D.C.
20551. The minutes are published in the Federal Reserve Bulletin and
in the Board's annual report.
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The information reviewed at this meeting suggests that the growth
of the economy has remained substantial. Nonfarm payroll employment
advanced appreciably further in October, and the civilian unemployment
rate edged down to 5.8 percent. Industrial production registered a
large increase in October after posting sizable gains on average over
other recent months, and capacity utilization moved up further from
already high levels. Retail sales have continued to rise rapidly.
Housing starts rose appreciably in September. Orders for nondefense
capital goods point to a continued strong expansion in spending on
business equipment; permits for nonresidential construction have been
trending higher. Inventory accumulation appears to have continued at a
brisk pace in the third quarter. For July and August combined, the
nominal deficit on U.S. trade in goods and services widened from its
second-quarter average. Prices of many materials have continued to move
up rapidly, but broad indexes of prices for consumer goods and services
have increased moderately on average over recent months.
Most market interest rates have risen appreciably since the
September meeting. The trade-weighted value of the dollar in terms of
the other G-10 [[Page 2600]] currencies was essentially unchanged on
balance over the intermeeting period, though it was weaker through much
of the period.
M2 contracted further in October while M3 expanded at a moderate
pace, buoyed by continued rapid growth in large-denomination time
deposits. For the year through October, M2 grew at a rate at the bottom
of the Committee's range for 1994 and M3 at a rate in the lower half of
its range for the year. Total domestic nonfinancial debt has continued
to expand at a moderate rate in recent months.
The Federal Open Market Committee seeks monetary and financial
conditions that will foster price stability and promote sustainable
growth in output. In furtherance of these objectives, the Committee at
its meeting in July reaffirmed the ranges it had established in
February for growth of M2 and M3 of 1 to 5 percent and 0 to 4 percent
respectively, measured from the fourth quarter of 1993 to the fourth
quarter of 1994. The Committee anticipated that developments
contributing to unusual velocity increases could persist during the
year and that money growth within these ranges would be consistent with
its broad policy objectives. The monitoring range for growth of total
domestic nonfinancial debt was maintained at 4 to 8 percent for the
year. For 1995, the Committee agreed on tentative ranges for monetary
growth, measured from the fourth quarter of 1994 to the fourth quarter
of 1995, of 1 to 5 percent for M2 and 0 to 4 percent for M3. The
Committee provisionally set the associated monitoring range for growth
of domestic nonfinancial debt at 3 to 7 percent for 1995. The behavior
of the monetary aggregates will continue to be evaluated in the light
of progress toward price level stability, movements in their
velocities, and developments in the economy and financial markets.
In the implementation of policy for the immediate future, the
Committee seeks to increase significantly the existing degree of
pressure on reserve positions, taking account of a possible increase in
the discount rate. In the context of the Committee's long-run
objectives for price stability and sustainable economic growth, and
giving careful consideration to economic, financial, and monetary
developments, somewhat greater reserve restraint or somewhat lesser
reserve restraint would be acceptable in the intermeeting period. The
contemplated reserve conditions are expected to be consistent with
modest growth in M2 and M3 over coming months.
By order of the Federal Open Market Committee, January 4, 1995.
Donald L. Kohn,
Secretary, Federal Open Market Committee.
[FR Doc. 95-531 Filed 1-9-95; 8:45 am]
BILLING CODE 6210-01-F
