[Federal Register Volume 59, Number 195 (Tuesday, October 11, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-25037]


[[Page Unknown]]

[Federal Register: October 11, 1994]


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FEDERAL RESERVE SYSTEM

 

Federal Open Market Committee; Domestic Policy Directive of 
August 16, 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 August 16, 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 August 16, 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 pace of 
economic expansion, though still substantial, may have moderated 
somewhat recently, while resource utilization has remained at high 
levels. Nonfarm payroll employment continued to advance at a robust 
pace in July, but the civilian unemployment rate edged up to 6.1 
percent--about the same as the average for the second quarter. 
Industrial production rose appreciably over June and July. Growth in 
consumer spending has slowed in recent months, owing in part to 
constraints on the supply of motor vehicles. Housing starts rose in 
July. Orders for nondefense capital goods point to a continued strong 
expansion in spending on business equipment; permits for nonresidential 
construction have been rising as well. Business inventories registered 
a large increase in the second quarter, but inventories appeared to 
have remained broadly in line with sales. The average nominal deficit 
on U.S. trade in goods and services was larger in April and May than 
the average for the first quarter. Increases in broad indexes of 
consumer and producer prices have remained moderate in recent months, 
apart form the effect of short-run swings in volatile food and energy 
components.
    Most market interest rates are unchanged to up slightly on balance 
since the July meeting. The trade-weighted value of the dollar in terms 
of the other G-10 currencies was unchanged on balance over the inter-
meeting period.
    M2 and M3 turned up in July following declines on average in both 
aggregates over May and June; for the year through July, M2 and M3 grew 
at rates slightly above the bottom of their ranges for 1994. 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 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 
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, October 4, 1994.
Donald L. Kohn,
Secretary, Federal Open Market Committee.
[FR Doc. 94-25037 Filed 10-11-94; 8:45 am]
BILLING CODE 6210-01-F