[Federal Register Volume 59, Number 229 (Wednesday, November 30, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-29457]
[[Page Unknown]]
[Federal Register: November 30, 1994]
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FEDERAL RESERVE SYSTEM
Federal Open Market Committee; Domestic Policy Directive of
September 27, 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 September 27, 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 perhaps moderating slightly in recent
months, remains substantial. Nonfarm payroll employment advanced
appreciably further in August, and the civilian unemployment rate was
unchanged at 6.1 percent. Reflecting strength in motor vehicles,
industrial production rose sharply in August after posting sizable
gains in other recent months, and capacity utilization moved up further
from already high levels. Retail sales were up considerably in August,
boosted by a rebound in sales of durable goods, including motor
vehicles. Housing starts rose in August but were unchanged from their
second-quarter level. Orders for nondefense capital goods point to a
continued strong expansion in spending on business equipment; permits
for non residential construction remain on a mild uptrend. Inventory
accumulation appears to have moderated recently after surging in the
second quarter. The nominal deficit on U.S. trade in goods and services
widened in July from its second-quarter average. Prices of materials
have remained under upward pressure, and increases in broad indexes of
consumer and producer prices have been somewhat larger in recent
months.
On August 16, 1994, the Board of Governors approved an increase in
the discount rate from 3-1/2 to 4 percent, and Committee agreed that
this increase would be allowed to show through completely to interest
rates in reserve markets. Most market interest rates are up somewhat on
balance since the August meeting. The trade-weighted value of the
dollar in terms of the other G-10 currencies depreciated somewhat over
the intermeeting period.
M2 and M3 declined in August after expanding moderately in July;
for the year through August, 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 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
modest growth in M2 and M3 over the balance of the year.
By order of the Federal Open Market Committee, November 23,
1994.
Donald L. Kohn,
Secretary, Federal Open Market Committee.
[FR Doc. 94-29457 Filed 11-29-94; 8:45 am]
BILLING CODE 6210-01-F
