[Federal Register Volume 61, Number 31 (Wednesday, February 14, 1996)]
[Notices]
[Pages 5775-5776]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-3314]
-----------------------------------------------------------------------
FEDERAL RESERVE SYSTEM
Federal Open Market Committee; Domestic Policy Directive of
December 19, 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 December 19, 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 December 19, 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.
---------------------------------------------------------------------------
The information reviewed at this meeting suggests a substantial
slowing in the expansion of economic activity after a strong gain in
the third quarter. Nonfarm payroll employment increased further in
November, but the civilian unemployment rate edged up to 5.6 percent.
Industrial production was little changed on average over October and
November after a moderate rise in the third quarter. Total nominal
retail sales rose somewhat on balance over October and November.
Housing starts were down in October after a large increase in the third
quarter. However, orders for nondefense capital goods point to
substantial expansion of spending on business equipment in the near
term, and nonresidential construction has risen appreciably further.
Wage trends have been stable and consumer prices have risen relatively
slowly on average in recent months.
Most market interest rates have declined slightly since the
Committee meeting on November 15. In foreign exchange markets, the
trade-weighted value of the dollar in terms of the other G-10
currencies has risen slightly on balance over the intermeeting period.
The substantial moderation in the growth of M2 and M3 since
midsummer continued in November; however, for the year through
November, M2 expanded at a rate in the upper half of its range for 1995
and M3 grew at a rate at the upper end of its range. Growth in total
domestic nonfinancial debt has slowed somewhat in recent months but for
the year to date remains around the midpoint of its monitoring 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 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 decrease slightly 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
[[Page 5776]]
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, February 7, 1996.
Donald L. Kohn,
Secretary, Federal Open Market Committee.
[FR Doc. 96-3314 Filed 2-13-96; 8:45 am]
BILLING CODE 6210-01-F
