[Federal Register Volume 62, Number 68 (Wednesday, April 9, 1997)]
[Notices]
[Page 17192]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-8990]
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FEDERAL RESERVE SYSTEM
Federal Open Market Committee; Domestic Policy Directive of
February 4-5, 1997.
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 February 4-5, 1997.\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 February 4-5, 1997, 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 economic
expansion strengthened markedly in the fourth quarter. Private nonfarm
payroll employment increased appreciably further in December after
sizable gains over October and November. The civilian unemployment rate
remained at 5.3 percent in December. Industrial production rose sharply
in November and December. Consumer spending posted a large increase in
the fourth quarter after a summer lull. Housing activity moderated
somewhat over the closing months of the year. Growth in business fixed
investment slowed substantially in the fourth quarter after a sharp
rise in the third quarter. The nominal deficit on U.S. trade in goods
and services narrowed considerably in October and November from its
rate in the third quarter. Advances in labor compensation trended up in
1996, but price inflation generally diminished apart from enlarged
increases in food and energy prices.
Most market interest rates have changed little or risen slightly
since the Committee meeting on December 17, 1996. In foreign exchange
markets, the trade-weighted value of the dollar in terms of the other
G-10 currencies has increased substantially over the intermeeting
period.
Growth of M2 and M3 strengthened considerably in the fourth quarter
and appeared to have continued at a fairly brisk, though diminished,
pace in January. From the fourth quarter of 1995 to the fourth quarter
of 1996, M2 is estimated to have grown near the upper end of the
Committee's annual range and M3 well above the top of its range. Total
domestic nonfinancial debt has expanded moderately on balance over
recent months and is estimated to have grown last year near the
midpoint 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
this meeting established ranges for growth of M2 and M3 of 1 to 5
percent and 2 to 6 percent respectively, measured from the fourth
quarter of 1996 to the fourth quarter of 1997. The monitoring range for
growth of total domestic nonfinancial debt was set at 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 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 some
moderation in the expansion of M2 and M3 over coming months.
By order of the Federal Open Market Committee, April 2, 1997.
Donald L. Kohn,
Secretary, Federal Open Market Committee.
[FR Doc. 97-8990 Filed 4-8-97; 8:45 am]
BILLING CODE 6210-01-F
