[Federal Register Volume 59, Number 40 (Tuesday, March 1, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-4539]


[[Page Unknown]]

[Federal Register: March 1, 1994]


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FEDERAL RESERVE SYSTEM

 

Federal Open Market Committee; Domestic Policy Directive of 
December 21, 1993

    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 December 21, 1993.\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 December 21, 1993, 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 a strong 
advance in economic activity in recent months. Total nonfarm payroll 
employment rose appreciably further in November, and the civilian 
unemployment rate fell considerably to 6.4 percent. Industrial 
production increased sharply in October and November, partly 
reflecting a continuing rebound in the output of motor vehicles. 
Retail sales were up moderately in November after a large increase 
in October. Housing starts advanced substantially in November. 
Business equipment expenditures have been rising rapidly, and 
nonresidential construction has turned up from depressed levels. The 
nominal U.S. merchandise trade deficit in October was about 
unchanged from its average rate in the third quarter. Broad indexes 
of consumer and producer prices suggest little change in inflation 
trends, although prices of some raw materials have increased 
recently.
    Short-term interest rates have changed little, while 
intermediate- and long-term rates have risen slightly since the 
Committee meeting on November 16. In foreign exchange markets, the 
trade-weighted value of the dollar in terms of the other G-10 
currencies is about unchanged on balance over the intermeeting 
period.
    Growth of M2 and M3 strengthened in November, and both 
aggregates have risen at somewhat faster rates since late summer 
than earlier in the year. For the year through November, M2 and M3 
are estimated to have grown at rates somewhat above the lower end of 
the Committee's ranges for the year. Total domestic nonfinancial 
debt has expanded at a moderate rate in recent months, and for the 
year through November it is estimated to have increased at a rate in 
the lower half of the Committee's monitoring 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 its meeting in July lowered the ranges it had established in 
February for growth of M2 and M3 to ranges of 1 to 5 percent and 0 
to 4 percent respectively, measured from the fourth quarter of 1992 
to the fourth quarter of 1993. The Committee anticipated that 
developments contributing to unusual velocity increases would 
persist over the balance of the year and that money growth within 
these lower ranges would be consistent with its broad policy 
objectives. The monitoring range for growth of total domestic 
nonfinancial debt also was lowered to 4 to 8 percent for the year. 
For 1994, the Committee agreed on tentative ranges for monetary 
growth, measured from the fourth quarter of 1993 to the fourth 
quarter of 1994, of 1 to 5 percent for M2 and 0 to 4 percent for M3. 
The Committee provisionally set the monitoring range for growth of 
total domestic nonfinancial debt at 4 to 8 percent for 1994. 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 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, February 22, 
1994.
Normand Bernard,
Deputy Secretary, Federal Open Market Committee.
[FR Doc. 94-4539 Filed 2-28-94; 8:45 am]
BILLING CODE 6210-01-F