[Federal Register Volume 60, Number 110 (Thursday, June 8, 1995)]
[Notices]
[Pages 30302-30303]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-14036]



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FEDERAL RESERVE SYSTEM

Federal Open Market Committee; Domestic Policy Directive of March 
28, 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 March 28, 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 March 28, 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 that the 
expansion of economic activity has moderated considerably in early 
1995. Nonfarm payroll employment rose appreciably further in January 
and February, but at a pace below the average monthly gain in 1994; the 
civilian unemployment rate, after rising in January, fell back in 
February to its December level of 5.4 percent. Advances in industrial 
production also moderated in January and February, and capacity 
utilization rates generally changed little from already high levels. 
Total retail sales were about unchanged over the two months. Housing 
starts have declined somewhat after posting sizable gains on balance 
during the closing months of 1994. Orders for nondefense capital goods 
point to a still strong expansion of spending on business equipment, 
but with tentative signs of some deceleration; nonresidential 
construction has been trending appreciably higher. The nominal deficit 
on U.S. trade in goods and services widened sharply in January from its 
[[Page 30303]] average rate in the fourth quarter. Broad indexes of 
consumer and producer prices increased faster on average over January 
and February.
    On February 1, 1995, the Board of Governors approved an increase 
from 4-3/4 to 5-1/4 percent in the discount rate, and in keeping with 
the Committee's decision at the January 31-February 1 meeting, the 
increase was allowed to show through fully to interest rates in reserve 
markets. Nonetheless, most market interest rates have declined somewhat 
since the Committee meeting; the largest declines have been 
concentrated in intermediate- and long-term obligations. In foreign 
exchange markets, the trade-weighted value of the dollar in terms of 
the other G-10 currencies was down substantially further over the 
intermeeting period. The Mexican peso has continued to depreciate 
against the dollar.
    M2 and M3 weakened in February, though data for the first part of 
March pointed to some rebound. Growth of total domestic nonfinancial 
debt has picked up a little 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 on January 31-February 1 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 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, 
somewhat greater reserve restraint would 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, June 2, 1995.
Normand Bernard,
Deputy Secretary, Federal Open Market Committee.
[FR Doc. 95-14036 Filed 6-7-95; 8:45 am]
BILLING CODE 6210-01-F