[Federal Register Volume 61, Number 229 (Tuesday, November 26, 1996)]
[Notices]
[Page 60102]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-30200]
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FEDERAL RESERVE SYSTEM
Federal Open Market Committee; Domestic Policy Directive of
September 24, 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 September 24, 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 September 24, 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 has moderated appreciably from an elevated second-
quarter pace. Private nonfarm payroll employment grew less rapidly over
July and August than in the second quarter, while the civilian
unemployment rate declined to 5.1 percent in August. Industrial
production increased somewhat less rapidly on average in July and
August than in the prior few months. Total retail sales rose slightly
over July and August after having declined substantially in June.
Housing starts in July and August were unchanged on average from their
second-quarter level. Demand for business equipment has remained
strong, while spending on nonresidential structures has changed little
on balance in recent months. The nominal deficit on U.S. trade in goods
and services widened substantially in July from its average in the
second quarter. Increases in labor compensation have been somewhat
larger this year, but consumer price inflation, excluding its food and
energy components, has edged lower.
Most market interest rates have risen somewhat on balance since the
Committee meeting on August 20, 1996. In foreign exchange markets, the
trade-weighted value of the dollar in terms of the other G-10
currencies has appreciated slightly over the intermeeting period.
Growth of M2 and M3 picked up in August, but they continued to
expand at rates below those in the first half of the year. For the year
through August, both aggregates are estimated to have grown at rates in
the upper portions 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, November 20,
1996.
Donald L. Kohn,
Secretary, Federal Open Market Committee.
[FR Doc. 96-30200 Filed 11-25-96; 8:45 am]
BILLING CODE 6210-01-F
