[Federal Register Volume 62, Number 68 (Wednesday, April 9, 1997)]
[Notices]
[Page 17192]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-8990]


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FEDERAL RESERVE SYSTEM


Federal Open Market Committee; Domestic Policy Directive of 
February 4-5, 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 February 4-5, 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 February 4-5, 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 strengthened markedly in the fourth quarter. Private nonfarm 
payroll employment increased appreciably further in December after 
sizable gains over October and November. The civilian unemployment rate 
remained at 5.3 percent in December. Industrial production rose sharply 
in November and December. Consumer spending posted a large increase in 
the fourth quarter after a summer lull. Housing activity moderated 
somewhat over the closing months of the year. Growth in business fixed 
investment slowed substantially in the fourth quarter after a sharp 
rise in the third quarter. The nominal deficit on U.S. trade in goods 
and services narrowed considerably in October and November from its 
rate in the third quarter. Advances in labor compensation trended up in 
1996, but price inflation generally diminished apart from enlarged 
increases in food and energy prices.
    Most market interest rates have changed little or risen slightly 
since the Committee meeting on December 17, 1996. In foreign exchange 
markets, the trade-weighted value of the dollar in terms of the other 
G-10 currencies has increased substantially over the intermeeting 
period.
    Growth of M2 and M3 strengthened considerably in the fourth quarter 
and appeared to have continued at a fairly brisk, though diminished, 
pace in January. From the fourth quarter of 1995 to the fourth quarter 
of 1996, M2 is estimated to have grown near the upper end of the 
Committee's annual range and M3 well above the top of its range. Total 
domestic nonfinancial debt has expanded moderately on balance over 
recent months and is estimated to have grown last year near the 
midpoint 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 at 
this meeting 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, April 2, 1997.
Donald L. Kohn,
Secretary, Federal Open Market Committee.
[FR Doc. 97-8990 Filed 4-8-97; 8:45 am]
BILLING CODE 6210-01-F