[Federal Register Volume 60, Number 196 (Wednesday, October 11, 1995)]
[Notices]
[Page 52915]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-25185]
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FEDERAL RESERVE SYSTEM
Federal Open Market Committee; Domestic Policy Directive of August
22, 1995
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 22, 1995.\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 August 22, 1995, 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 a strengthening
in the expansion of economic activity in the current quarter from the
weak second-quarter pace. Nonfarm payroll employment increased in June
and July after declining in May; the advance was held down by
continuing employment losses in manufacturing. The civilian
unemployment rate in July was at its second-quarter average of 5.7
percent. Industrial production changed little in recent months after
falling earlier while capacity utilization was down somewhat further.
Total retail sales have risen appreciably on balance since early
spring, but they edged down in July, reflecting weakness in motor
vehicles. Housing starts were up sharply in July after changing little
in previous months. Orders for nondefense capital goods still point to
considerable further expansion of spending on business equipment over
coming months; nonresidential construction has continued to trend
appreciably higher. The nominal deficit on U.S. trade in goods and
services widened in the second quarter from its average rate in the
first quarter. After increasing at elevated rates in the early part of
the year, consumer and producer prices have risen more slowly in recent
months. Advances in labor compensation costs have remained subdued.
Short-term interest rates have posted mixed changes since the
Committee meeting on July 5-6, while intermediate- and long-term rates
have risen appreciably. In foreign exchange markets, the trade-weighted
value of the dollar in terms of the other G-10 currencies appreciated
substantially over the intermeeting period, with the gain occurring
since the beginning of August.
M2 and M3 continued to register sizable increases in July and
appeared to be expanding considerably further in August. For the year
through July, M2 expanded at a rate in the upper half of its range for
1995 and M3 grew at a rate above its upwardly revised range. Total
domestic nonfinancial debt has grown at a rate in the upper half of its
monitoring range 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 range it had established on January
31-February 1 for growth of M2 of 1 to 5 percent, measured from the
fourth quarter of 1994 to the fourth quarter of 1995. The Committee
also retained the monitoring range of 3 to 7 percent for the year that
it had set for growth of total domestic nonfinancial debt. The
Committee raised the 1995 range for M3 to 2 to 6 percent as a technical
adjustment to take account of changing intermediation patterns. For
1996, the Committee established on a tentative basis the same ranges as
in 1995 for growth of the monetary aggregates and debt, measured from
the fourth quarter of 1995 to the fourth quarter of 1996. 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 maintain the existing degree of pressure on reserve
positions. 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 more moderate
growth in M2 and M3 over coming months.
By order of the Federal Open Market Committee, October 4, 1995.
Donald L. Kohn,
Secretary, Federal Open Market Committee.
[FR Doc. 95-25185 Filed 10-10-95; 8:45 am]
BILLING CODE 6210-01-F
