[Federal Register Volume 59, Number 195 (Tuesday, October 11, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-25037]
[[Page Unknown]]
[Federal Register: October 11, 1994]
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FEDERAL RESERVE SYSTEM
Federal Open Market Committee; Domestic Policy Directive of
August 16, 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 August 16, 1994.\1\ The directive was issued to the
Federal Reserve Bank of New York as follows:
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\1\ Copies of the Minutes of the Federal Open Market Committee
meeting of August 16, 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 pace of
economic expansion, though still substantial, may have moderated
somewhat recently, while resource utilization has remained at high
levels. Nonfarm payroll employment continued to advance at a robust
pace in July, but the civilian unemployment rate edged up to 6.1
percent--about the same as the average for the second quarter.
Industrial production rose appreciably over June and July. Growth in
consumer spending has slowed in recent months, owing in part to
constraints on the supply of motor vehicles. Housing starts rose in
July. Orders for nondefense capital goods point to a continued strong
expansion in spending on business equipment; permits for nonresidential
construction have been rising as well. Business inventories registered
a large increase in the second quarter, but inventories appeared to
have remained broadly in line with sales. The average nominal deficit
on U.S. trade in goods and services was larger in April and May than
the average for the first quarter. Increases in broad indexes of
consumer and producer prices have remained moderate in recent months,
apart form the effect of short-run swings in volatile food and energy
components.
Most market interest rates are unchanged to up slightly on balance
since the July meeting. The trade-weighted value of the dollar in terms
of the other G-10 currencies was unchanged on balance over the inter-
meeting period.
M2 and M3 turned up in July following declines on average in both
aggregates over May and June; for the year through July, M2 and M3 grew
at rates slightly above the bottom of their ranges for 1994. 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 somewhat 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,
slightly greater reserve restraint or slightly 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, October 4, 1994.
Donald L. Kohn,
Secretary, Federal Open Market Committee.
[FR Doc. 94-25037 Filed 10-11-94; 8:45 am]
BILLING CODE 6210-01-F
