[Federal Register Volume 59, Number 135 (Friday, July 15, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-17179]


[[Page Unknown]]

[Federal Register: July 15, 1994]


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FEDERAL HOUSING FINANCE BOARD
 

FEDERAL RESERVE SYSTEM

Federal Open Market Committee; Domestic Policy Directive of May 17, 
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 May 17, 1994.\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 May 17, 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 economic 
activity has expanded substantially on balance thus far in 1994. 
Nonfarm payroll employment increased sharply in March and April, in 
part reflecting a rebound in sectors affected by severe winter weather; 
the civilian unemployment rate fell slightly further in April, to 6.4 
percent. Industrial production was up appreciably in April after a 
strong rise over the previous two quarters. Advance data on retail 
sales indicate a decline in April, after very large increases in 
February and March. Housing starts fell slightly in April but remained 
well above the depressed winter pace. Orders for nondefense capital 
goods point to a continued strong uptrend in spending on business 
equipment, while nonresidential building has shown some recovery after 
severe weather disrupted construction during January and February. The 
nominal deficit on U.S. trade in goods and services widened on average 
in January and February from the fourth-quarter rate. Increases in 
broad indexes of consumer and producer prices remained moderate through 
April, though prices of industrial materials continued to rise.
    Market interest rates have posted large additional increases since 
the Committee meeting on March 22, 1994. In foreign exchange markets, 
the trade-weighted value of the dollar in terms of the other G-10 
currencies declined somewhat further on balance over the intermeeting 
period.
    Growth of M2 and M3 picked up on average in March and April; for 
the year through April, M2 expanded at a rate somewhat below the middle 
of its range for 1994 and M3 at a pace somewhat above the bottom of its 
range. Total domestic nonfinancial debt has expanded 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 February established ranges 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 set 
at 4 to 8 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 increase somewhat 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, 
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 modest growth in 
M2 and M3 over coming months.

    By order of the Federal Open Market Committee, July 11, 1994.
Normand Bernard,
Deputy Secretary, Federal Open Market Committee.
[FR Doc. 94-17179 Filed 7-14-94; 8:45 am]
BILLING CODE 6210-01-F