[Federal Register Volume 60, Number 67 (Friday, April 7, 1995)]
[Notices]
[Page 17789]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-8579]
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FEDERAL RESERVE SYSTEM
Federal Open Market Committee; Domestic Policy Directive of
January 31-February 1, 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 January 31-February 1, 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 January 31-February 1, 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.
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The information reviewed at this meeting suggests a strong further
rise in economic activity during the closing months of 1994. Nonfarm
payroll employment was up considerably further in December after a
sharp increase in November, and the civilian unemployment rate declined
to 5.4 percent. Industrial production registered another large advance
in December and capacity utilization continued to move up from already
high levels. Current estimates indicate little change in retail sales
over November and December, while housing starts posted sizable gains
on balance over the two months. Orders for nondefense capital goods
point to a continued strong expansion in spending on business
equipment; permits for nonresidential construction have been trending
appreciably higher. The nominal deficit on U.S. trade in goods and
services widened somewhat in October-November from its average rate in
the third quarter. Prices of many materials have continued to move up
rapidly, but broad indexes of prices for consumer goods and services
have increased moderately on average over recent months.
Most market interest rates have declined slightly on balance since
the Committee meeting on December 20, 1994. In foreign exchange
markets, the trade-weighted value of the dollar in terms of the other
G-10 currencies has declined somewhat over the intermeeting period. The
Mexican peso has depreciated sharply against the dollar.
Growth of M2 and M3 strengthened in December and January. From the
fourth quarter of 1993 to the fourth quarter of 1994, M2 grew at a rate
at the bottom of the Committee's range for 1994 and M3 at a rate in the
lower half of its range for the year. Total domestic nonfinancial debt
has continued to expand at a moderate rate in recent months, and for
the year 1994 it grew at a rate in the lower half 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
this meeting established ranges for growth of M2 and M3 of 1 to 5
percent and 0 to 4 percent respectively, measured from the fourth
quarter of 1994 to the fourth quarter of 1995. The Committee
anticipated 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 lowered to 3 to 7 percent for the
year. 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 increase somewhat the existing degree of pressure on
reserve positions, taking account of a possible increase in the
discount rate. 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 or somewhat lesser reserve restraint
would 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, April 3, 1995.
Donald L. Kohn,
Secretary, Federal Open Market Committee.
[FR Doc. 95-8579 Filed 4-6-95; 8:45 am]
BILLING CODE 6210-01-F
