97-3621. Federal Open Market Committee; Domestic Policy Directive of December 17, 1996.  

  • [Federal Register Volume 62, Number 30 (Thursday, February 13, 1997)]
    [Notices]
    [Pages 6786-6787]
    From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
    [FR Doc No: 97-3621]
    
    
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    FEDERAL RESERVE SYSTEM
    
    Federal Open Market Committee; Domestic Policy Directive of 
    December 17, 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 December 17, 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 December 17, 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 economic 
    activity has continued to expand at a moderate pace. Private nonfarm 
    payroll employment increased appreciably further in November, although 
    the civilian unemployment rate edged up to 5.4 percent. Industrial 
    production rose sharply in November, in part because of a rebound in 
    motor vehicle assemblies that had been depressed earlier by work 
    stoppages. Consumer spending has posted appreciable gains over recent 
    months after a summer lull. Housing starts rebounded in November after 
    declining in September and October. Business fixed investment appears 
    to be growing moderately after a sharp rise in the third quarter. The 
    nominal deficit on U.S. trade in goods and services widened 
    substantially in the third quarter from its rate in the second quarter. 
    Increases in labor compensation have trended up this year, and consumer 
    price inflation also has picked up owing to larger increases in food 
    and energy prices.
        Short-term market interest rates have registered mixed changes 
    since the Committee meeting on November 13, 1996, while long-term 
    yields have risen slightly. In foreign exchange markets, the trade-
    weighted value of the dollar in terms of the other G-10 currencies has 
    risen slightly over the intermeeting period.
        Growth of M2 picked up in November, while expansion of M3 moderated 
    somewhat from its brisk pace in October. For the year through November, 
    M2 is estimated to have grown at a rate in the upper half of the 
    Committee's annual range, and M3 at a rate a little above the top of 
    its range. Total domestic nonfinancial debt has expanded moderately 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
    
    [[Page 6787]]
    
    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 aggregates 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 
    relatively strong expansion in M2 and M3 over coming months.
        By order of the Federal Open Market Committee, February 7, 1997.
    Donald L. Kohn,
    Secretary, Federal Open Market Committee.
    [FR Doc. 97-3621 Filed 2-12-97; 8:45 am]
    BILLING CODE 6210-01-F
    
    
    

Document Information

Published:
02/13/1997
Department:
Federal Reserve System
Entry Type:
Notice
Document Number:
97-3621
Pages:
6786-6787 (2 pages)
PDF File:
97-3621.pdf