[Federal Register Volume 60, Number 234 (Wednesday, December 6, 1995)]
[Notices]
[Pages 62468-62469]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-29696]



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FEDERAL RESERVE SYSTEM

Federal Open Market Committee; Domestic Policy Directive of 
September 26, 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 September 26, 1995.\1\ The directive was issued to the 

[[Page 62469]]
Federal Reserve Bank of New York as follows:

    \1\Copies of the Minutes of the Federal Open Market Committee 
meeting of September 26, 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 economic 
activity is expanding at a moderate rate in the current quarter. 
Nonfarm payroll employment increased considerably in August after 
essentially no growth in July; the civilian unemployment rate edged 
down to 5.6 percent in August. Industrial production posted a large 
increase in August to a level moderately above the average of the 
second quarter. Total nominal retail sales rose slightly on balance 
over July and August after registering appreciable gains in the prior 
two months. Housing starts were up a little in August after increasing 
sharply in July. Orders for nondefense capital goods have softened but 
still point to substantial expansion of spending on business equipment 
over coming months; nonresidential construction has been strong of late 
The nominal deficit on U.S. trade in goods and services widened 
slightly in July from its average rate in the second quarter. After 
increasing at elevated rates in the early part of the year, consumer 
and producer prices have risen more slowly in recent months.
    Market interest rates have fallen somewhat since the Committee 
meeting on August 22. In foreign exchange markets, the trade-weighted 
value of the dollar in terms of the other G-10 currencies has declined 
over the intermeeting period, with most of the decline occurring over 
the past several days.
    M2 and M3 continued to register sizable increases in August but 
growth of those aggregates appears to have moderated somewhat in 
September. For the year through August, M2 expanded at a rate somewhat 
below the upper end of its range for 1995 and M3 grew at a rate 
appreciably above its range. Total domestic nonfinancial debt has grown 
at a rate around 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 in July reaffirmed 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 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, 
slightly greater reserve restraint or slightly lesser reserve restraint 
would be acceptable in the intermeeting period. The contemplated 
reserve conditions are expected to be consistent with growth in M2 and 
M3 over the balance of the year near the pace of recent months.

    By order of the Federal Open Market Committee, November 27, 
1995.
Donald L. Kohn,
Secretary, Federal Open Market Committee.
[FR Doc. 95-29696 Filed 12-5-95; 8:45 am]
BILLING CODE 6210-01-F-M