[Federal Register Volume 60, Number 174 (Friday, September 8, 1995)]
[Notices]
[Page 46836]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-22389]
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FEDERAL RESERVE SYSTEM
Federal Open Market Committee; Domestic Policy Directive of July
5-6, 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 July 5-6, 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 July 5-6, 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 level of
economic activity was about unchanged in the second quarter. Nonfarm
payroll employment fell in April and May after posting reduced gains in
the first quarter, and the civilian unemployment rate, at 5.7 percent
in May, was up somewhat from its first-quarter average. Industrial
production continued to decline in May, reflecting another cutback in
the production of motor vehicles, and capacity utilization was down
somewhat further. Total retail sales have been sluggish on average in
recent months. Housing starts were about unchanged over April and May,
but sales of new homes turned up sharply in May. Orders for nondefense
capital goods have moderated somewhat in recent months but still point
to considerable further 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
April from its average rate in the first quarter. Broad indexes of
consumer and producer prices have increased faster on average thus far
this year, though there were signs of some moderation in the most
recent data; advances in labor compensation costs have remained
subdued.
Most interest rates have declined somewhat further since the
Committee meeting on May 23. In foreign exchange markets, the trade-
weighted value of the dollar in terms of the other G-10 currencies
declined considerably over the intermeeting period.
M2 and M3 strengthened substantially in May and June. For the year
through June, M2 expanded at a rate in the upper half of its range for
1995 and M3 grew at a rate well above its range. Total domestic
nonfinancial debt has grown at a rate in the upper half 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
reaffirmed at this meeting the range it had established on January 31-
February 1 for growth of M2 of 1 to 5 percent, measured from the fourth
quarter of 1994 to the fourth quarter of 1995. The Committee also
retained the monitoring range of 3 to 7 percent for the year that it
had set for growth of total domestic nonfinancial debt. The Committee
raised the 1995 range for M3 to 2 to 6 percent as a technical
adjustment to take account of changing intermediation patterns. For
1996, the Committee established on a tentative basis the same ranges as
in 1995 for growth of the monetary aggregates and debt, measured from
the fourth quarter of 1995 to the fourth quarter of 1996. 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 decrease slightly 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, slightly greater reserve restraint might or slightly
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, August 31, 1995.
Normand R. Bernard,
Deputy Secretary, Federal Open Market Committee.
[FR Doc. 95-22389 Filed 9-7-95; 8:45 am]
BILLING CODE 6210-01-F
