[Federal Register Volume 61, Number 174 (Friday, September 6, 1996)]
[Notices]
[Pages 47129-47130]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-22805]
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FEDERAL RESERVE SYSTEM
Federal Open Market Committee; Domestic Policy Directive of July
2-3, 1996.
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 July 2-3, 1996.\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 July 2-3, 1996, 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 advanced considerably further in the second quarter, but
increases in final demand showed some signs of moderation. Nonfarm
payroll employment was up substantially in April and May; the civilian
unemployment rate rose to 5.6 percent in May. Industrial production
increased appreciably further in May, reflecting gains across a wide
range of industries. Real consumer spending rose substantially on
balance over April and May. Single-family housing starts fell
considerably in May from a relatively high level in April. Orders and
contracts point to some deceleration in spending on business equipment
and nonresidential structures after a very rapid expansion earlier in
the year. The nominal deficit on U.S. trade in goods and services
widened in April from its rate in the first quarter. Upward pressures
on food and energy prices have led to somewhat larger increases in the
consumer price index over recent months.
Most Market interest rates have edged higher since the Committee
meeting on May 21. In foreign exchange markets, the trade-weighted
value of the dollar in terms of the other G-10 currencies has
depreciated slightly over the intermeeting period.
M2 declined in May, though partial data for June pointed to a
rebound. Growth of M3 was relatively sluggish in May but also appears
to have turned up in June. For the year through June, both aggregates
are estimated to have grown at rates around the upper bounds of
[[Page 47130]]
their respective ranges for the year. Expansion in total domestic
nonfinancial debt has been moderate on balance over recent months and
has remained in the middle portion 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 January for
growth of M2 and M3 of 1 to 5 percent and 2 to 6 percent respectively,
measured from the fourth quarter of 1995 to the fourth quarter of 1996.
The monitoring range for growth of total domestic nonfinancial debt was
maintained at 3 to 7 percent for the year. For 1997 the Committee
agreed on tentative ranges for monetary growth, measured from the
fourth quarter of 1996 to the fourth quarter of 1997, of 1 to 5 percent
for M2 and 2 to 6 percent for M3. The Committee provisionally set the
associated monitoring range for growth of total domestic nonfinancial
debt at 3 to 7 percent for 1997. 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 28, 1996.
Donald L. Kohn,
Secretary, Federal Open Market Committee.
[FR Doc. 96-22805 Filed 9-5-96; 8:45 am]
BILLING CODE 6210-01-F
