[Federal Register Volume 61, Number 195 (Monday, October 7, 1996)]
[Notices]
[Pages 52453-52454]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-25581]
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FEDERAL RESERVE SYSTEM
Federal Open Market Committee; Domestic Policy Directive of
August 20, 1996.
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 20, 1996.\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 20, 1996, 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 growth in
economic activity recently has moderated somewhat. Private nonfarm
payroll employment grew less rapidly in July, the average workweek fell
sharply, and the civilian unemployment rate edged up to 5.4 percent.
Industrial production increased slightly in July after three months of
strong gains. Real consumer spending weakened somewhat on balance over
June and July following several months of robust growth. Housing starts
fell somewhat further in July. Growth in spending on
[[Page 52454]]
business equipment and nonresidential structures has slowed after a
very rapid expansion earlier in the year. The nominal deficit on U.S.
trade in goods and services widened in the second quarter from its rate
in the first quarter. Increases in labor compensation have been
somewhat larger this year, but consumer price inflation, adjusted for
food and energy prices, has remained on a fairly steady trend.
Most short-term market interest rates have declined slightly while
intermediate- and long-term rates have fallen somewhat more since the
Committee meeting on July 2-3, 1996. In foreign exchange markets, the
trade-weighted value of the dollar in terms of the other G-10
currencies has depreciated slightly over the intermeeting period.
Growth of M2 and M3 moderated in July. For the year through July,
both aggregates are estimated to have grown at rates somewhat below the
upper bounds of their respective ranges for the year. Expansion in
total domestic nonfinancial debt has been moderate on balance over
recent months and has remained in the middle portion of its range.
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 January
for growth of M2 and M3 of 1 to 5 percent and 2 to 6 percent
respectively, measured from the fourth quarter of 1995 to the fourth
quarter of 1996. The monitoring range for growth of total domestic
nonfinancial debt was maintained at 3 to 7 percent for the year. For
1997 the Committee agreed on a tentative basis to set the same ranges
as in 1996 for growth of the monetary aggregages and debt, measured
from the fourth quarter of 1996 to the fourth quarter of 1997. 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,
somewhat greater reserve restraint would or slightly lesser reserve
restraint might be acceptable in the intermeeting period. The
contemplated reserve conditions are expected to be consistent with
moderate growth in M2 and M3 over coming months.
By order of the Federal Open Market Committee, September 30,
1996.
Donald L. Kohn,
Secretary, Federal Open Market Committee.
[FR Doc. 96-25581 Filed 10-4-96; 8:45 am]
BILLING CODE 6210-01-F
