[Federal Register Volume 62, Number 136 (Wednesday, July 16, 1997)]
[Notices]
[Page 38092]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-18718]
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FEDERAL RESERVE SYSTEM
Federal Open Market Committee; Domestic Policy Directive of May
20, 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 May 20, 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 May 20, 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 growth in
economic activity has slowed after surging in late 1996 and earlier
this year. Private nonfarm payroll employment increased at a
considerably reduced pace over March and April, but the civilian
unemployment rate fell appreciably to 4.9 percent in April. Industrial
production was flat in April following sizable gains over previous
months. Nominal retail sales were unchanged in March and declined in
April after a considerable advance in earlier months. Housing activity
in March and April was little changed from other recent months.
Available indicators point to further sizable gains in business fixed
investment. The nominal deficit on U.S. trade in goods and services
widened substantially in January-February from its temporarily
depressed rate in the fourth quarter. Underlying price inflation has
remained subdued.
Market interest rates generally have posted small mixed changes
since the Committee meeting on March 25, 1997; share prices in equity
markets have risen considerably. In foreign exchange markets, the
trade-weighted value of the dollar in terms of the other G-10
currencies declined on balance over the intermeeting period.
Growth of M2 and M3 was brisk over March and April, boosted by a
buildup in household balances to cover unusually large tax payments.
For the year through April, both aggregates expanded at rates
appreciably above the upper bounds of their respective ranges for the
year. Growth in total domestic nonfinancial debt has moderated over
recent months, reflecting reductions in federal government borrowing.
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 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, July 9, 1997.
Donald L. Kohn,
Secretary, Federal Open Market Committee.
[FR Doc. 97-18718 Filed 7-15-97; 8:45 am]
BILLING CODE 6210-01-F
