[Federal Register Volume 62, Number 168 (Friday, August 29, 1997)]
[Notices]
[Page 45814]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-23001]
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FEDERAL RESERVE SYSTEM
Federal Open Market Committee; Domestic Policy Directive of
August 19, 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 August 19, 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 August 19, 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 slowed substantially in the second quarter after surging in
late 1996 and earlier this year. Private nonfarm payroll employment
increased at a reduced pace in May, but the civilian unemployment rate
fell slightly further to 4.8 percent. Industrial production registered
another sizable gain in May. Personal consumption expenditures, in real
terms, rose substantially in May after having changed little over the
preceding three months. Housing activity appears to have been well
maintained in recent months. Available indicators point to further
sizable gains in business fixed investment. The norminal deficit on
U.S. trade in goods and services narrowed somewhat in April from its
downward-revised average rate in the first quarter. Price inflation has
remained subdued.
Market interest rates generally have declined somewhat since the
day before the Committee meeting on May 20, 1997; share prices in
equity markets have risen considerably further. In foreign exchange
markets, the trade-weighted value of the dollar in terms of the other
G-10 currencies was up slightly on balance over the intermeeting
period.
Growth of M2 and M3 fluctuated sharply from April to May in
association with a swing in household balances related to large tax
payments; on balance, both aggregates expanded at a moderate pace over
the two months, and available data pointed to further moderate growth
in June. For the year through June, M2 expanded at a rate near the
upper bound of its range for the year and M3 at a rate somewhat above
the upper bound of its range. Total domestic nonfinancial debt has
continued to expand in recent months and is near the middle 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
reaffirmed at this meeting the ranges it had established in February
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 range for growth of total domestic nonfinancial
debt was maintained at 3 to 7 percent for the year. For 1988, the
Committee agreed on tentative ranges for monetary growth, measured from
the fourth quarter of 1997 to the fourth quarter of 1998, of 1 to 5
percent for M2 and 2 to 6 percent for M3. The Committee provisionally
set the associated range for growth of total domestic nonfinancial debt
at 3 to 7 percent for 1998. 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
moderate growth in M2 and M3 over coming months.
By order of the Federal Open Market Committee, August 22, 1997.
Donald L. Kohn,
Secretary, Federal Open Market Committee.
[FR Doc. 97-23001 Filed 8-28-97; 8:45 am]
BILLING CODE 6210-01-F
