[Federal Register Volume 60, Number 6 (Tuesday, January 10, 1995)]
[Notices]
[Pages 2599-2600]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-531]



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FEDERAL RESERVE SYSTEM


Federal Open Market Committee; Domestic Policy Directive of 
November 15, 1994

    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 November 15, 1994.\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 November 15, 1994, 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 growth 
of the economy has remained substantial. Nonfarm payroll employment 
advanced appreciably further in October, and the civilian unemployment 
rate edged down to 5.8 percent. Industrial production registered a 
large increase in October after posting sizable gains on average over 
other recent months, and capacity utilization moved up further from 
already high levels. Retail sales have continued to rise rapidly. 
Housing starts rose appreciably in September. Orders for nondefense 
capital goods point to a continued strong expansion in spending on 
business equipment; permits for nonresidential construction have been 
trending higher. Inventory accumulation appears to have continued at a 
brisk pace in the third quarter. For July and August combined, the 
nominal deficit on U.S. trade in goods and services widened from its 
second-quarter average. Prices of many materials have continued to move 
up rapidly, but broad indexes of prices for consumer goods and services 
have increased moderately on average over recent months.
    Most market interest rates have risen appreciably since the 
September meeting. The trade-weighted value of the dollar in terms of 
the other G-10 [[Page 2600]] currencies was essentially unchanged on 
balance over the intermeeting period, though it was weaker through much 
of the period.
    M2 contracted further in October while M3 expanded at a moderate 
pace, buoyed by continued rapid growth in large-denomination time 
deposits. For the year through October, M2 grew at a rate at the bottom 
of the Committee's range for 1994 and M3 at a rate in the lower half of 
its range for the year. Total domestic nonfinancial debt has continued 
to expand at a moderate rate 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 ranges it had established in 
February for growth of M2 and M3 of 1 to 5 percent and 0 to 4 percent 
respectively, measured from the fourth quarter of 1993 to the fourth 
quarter of 1994. The Committee anticipated that developments 
contributing to unusual velocity increases could persist during the 
year and that money growth within these ranges would be consistent with 
its broad policy objectives. The monitoring range for growth of total 
domestic nonfinancial debt was maintained at 4 to 8 percent for the 
year. For 1995, the Committee agreed on tentative ranges for monetary 
growth, measured from the fourth quarter of 1994 to the fourth quarter 
of 1995, of 1 to 5 percent for M2 and 0 to 4 percent for M3. The 
Committee provisionally set the associated monitoring range for growth 
of domestic nonfinancial debt at 3 to 7 percent for 1995. 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 increase significantly the existing degree of 
pressure on reserve positions, taking account of a possible increase in 
the discount rate. 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 or somewhat lesser 
reserve restraint would be acceptable in the intermeeting period. The 
contemplated reserve conditions are expected to be consistent with 
modest growth in M2 and M3 over coming months.
    By order of the Federal Open Market Committee, January 4, 1995.
Donald L. Kohn,
Secretary, Federal Open Market Committee.
[FR Doc. 95-531 Filed 1-9-95; 8:45 am]
BILLING CODE 6210-01-F