[Federal Register Volume 60, Number 136 (Monday, July 17, 1995)]
[Notices]
[Pages 36428-36429]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-17412]
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FEDERAL RESERVE SYSTEM
Federal Open Market Committee; Domestic Policy Directive of May
23, 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 May 23, 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 May 23, 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 that the
expansion of economic activity has slowed considerably further. In
April, nonfarm payroll employment was about unchanged after posting
reduced gains in the first quarter, and the civilian unemployment rate
rose to 5.8 percent. Industrial production fell in April, largely
reflecting a cutback in the production of motor vehicles, and capacity
utilization rates declined somewhat. Reflecting markedly weaker demand
for motor vehicles, total retail sales were down in April after rising
moderately over the first quarter. Housing starts were unchanged in
April after declining sharply in the first quarter. Orders for
nondefense capital goods point to further strong expansion of spending
on business equipment; nonresidential construction has continued to
trend appreciably higher. The nominal deficit on U.S. trade in goods
and services widened in the first quarter from its average rate in the
fourth quarter. Broad indexes of consumer and producer prices have
increased faster on average thus far this year, while advances in labor
compensation costs have remained subdued.
[[Page 36429]]
Intermediate- and long-term interest rates have declined
considerably further since the Committee meeting on March 28, while
short-term rates have registered small decreases. In foreign exchange
markets, the trade-weighted value of the dollar in terms of the other
G-10 currencies, after falling to low levels, rose on balance over the
intermeeting period.
M2 and M3 strengthened in March and April. For the year through
April, M2 expanded at a rate in the lower half of its range for 1995
and M3 grew at a rate somewhat above its range. Total domestic
nonfinancial debt has grown at a rate a bit above the midpoint of its
monitoring range 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 on January 31-February 1 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 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 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, July 11, 1995.
Donald L. Kohn,
Secretary, Federal Open Market Committee.
[FR Doc. 95-17412 Filed 7-14-95; 8:45 am]
BILLING CODE 6210-01-F
