[Federal Register Volume 60, Number 67 (Friday, April 7, 1995)]
[Notices]
[Page 17789]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-8579]



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FEDERAL RESERVE SYSTEM


Federal Open Market Committee; Domestic Policy Directive of 
January 31-February 1, 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 January 31-February 1, 1995.\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 January 31-February 1, 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 a strong further 
rise in economic activity during the closing months of 1994. Nonfarm 
payroll employment was up considerably further in December after a 
sharp increase in November, and the civilian unemployment rate declined 
to 5.4 percent. Industrial production registered another large advance 
in December and capacity utilization continued to move up from already 
high levels. Current estimates indicate little change in retail sales 
over November and December, while housing starts posted sizable gains 
on balance over the two months. Orders for nondefense capital goods 
point to a continued strong expansion in spending on business 
equipment; permits for nonresidential construction have been trending 
appreciably higher. The nominal deficit on U.S. trade in goods and 
services widened somewhat in October-November from its average rate in 
the third quarter. 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 declined slightly on balance since 
the Committee meeting on December 20, 1994. In foreign exchange 
markets, the trade-weighted value of the dollar in terms of the other 
G-10 currencies has declined somewhat over the intermeeting period. The 
Mexican peso has depreciated sharply against the dollar.
    Growth of M2 and M3 strengthened in December and January. From the 
fourth quarter of 1993 to the fourth quarter of 1994, 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, and for 
the year 1994 it grew at a rate in the lower half of its 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 
this meeting 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 1994 to the fourth quarter of 1995. The Committee 
anticipated 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 lowered to 3 to 7 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, 
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 moderate growth 
in M2 and M3 over coming months.
    By order of the Federal Open Market Committee, April 3, 1995.
Donald L. Kohn,
Secretary, Federal Open Market Committee.
[FR Doc. 95-8579 Filed 4-6-95; 8:45 am]
BILLING CODE 6210-01-F