[Federal Register Volume 59, Number 135 (Friday, July 15, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-17179]
[[Page Unknown]]
[Federal Register: July 15, 1994]
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FEDERAL HOUSING FINANCE BOARD
FEDERAL RESERVE SYSTEM
Federal Open Market Committee; Domestic Policy Directive of May 17,
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 May 17, 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 May 17, 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 economic
activity has expanded substantially on balance thus far in 1994.
Nonfarm payroll employment increased sharply in March and April, in
part reflecting a rebound in sectors affected by severe winter weather;
the civilian unemployment rate fell slightly further in April, to 6.4
percent. Industrial production was up appreciably in April after a
strong rise over the previous two quarters. Advance data on retail
sales indicate a decline in April, after very large increases in
February and March. Housing starts fell slightly in April but remained
well above the depressed winter pace. Orders for nondefense capital
goods point to a continued strong uptrend in spending on business
equipment, while nonresidential building has shown some recovery after
severe weather disrupted construction during January and February. The
nominal deficit on U.S. trade in goods and services widened on average
in January and February from the fourth-quarter rate. Increases in
broad indexes of consumer and producer prices remained moderate through
April, though prices of industrial materials continued to rise.
Market interest rates have posted large additional increases since
the Committee meeting on March 22, 1994. In foreign exchange markets,
the trade-weighted value of the dollar in terms of the other G-10
currencies declined somewhat further on balance over the intermeeting
period.
Growth of M2 and M3 picked up on average in March and April; for
the year through April, M2 expanded at a rate somewhat below the middle
of its range for 1994 and M3 at a pace somewhat above the bottom of its
range. Total domestic nonfinancial debt has expanded 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 February 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 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 set
at 4 to 8 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,
slightly greater reserve restraint 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 coming months.
By order of the Federal Open Market Committee, July 11, 1994.
Normand Bernard,
Deputy Secretary, Federal Open Market Committee.
[FR Doc. 94-17179 Filed 7-14-94; 8:45 am]
BILLING CODE 6210-01-F
