[Federal Register Volume 60, Number 136 (Monday, July 17, 1995)]
[Notices]
[Pages 36428-36429]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-17412]



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FEDERAL RESERVE SYSTEM


Federal Open Market Committee; Domestic Policy Directive of May 
23, 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 May 23, 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 May 23, 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 slowed considerably further. In 
April, nonfarm payroll employment was about unchanged after posting 
reduced gains in the first quarter, and the civilian unemployment rate 
rose to 5.8 percent. Industrial production fell in April, largely 
reflecting a cutback in the production of motor vehicles, and capacity 
utilization rates declined somewhat. Reflecting markedly weaker demand 
for motor vehicles, total retail sales were down in April after rising 
moderately over the first quarter. Housing starts were unchanged in 
April after declining sharply in the first quarter. Orders for 
nondefense capital goods point to further strong expansion of spending 
on business equipment; nonresidential construction has continued to 
trend appreciably higher. The nominal deficit on U.S. trade in goods 
and services widened in the first quarter from its average rate in the 
fourth quarter. Broad indexes of consumer and producer prices have 
increased faster on average thus far this year, while advances in labor 
compensation costs have remained subdued.

[[Page 36429]]

    Intermediate- and long-term interest rates have declined 
considerably further since the Committee meeting on March 28, while 
short-term rates have registered small decreases. In foreign exchange 
markets, the trade-weighted value of the dollar in terms of the other 
G-10 currencies, after falling to low levels, rose on balance over the 
intermeeting period.
    M2 and M3 strengthened in March and April. For the year through 
April, M2 expanded at a rate in the lower half of its range for 1995 
and M3 grew at a rate somewhat above its range. Total domestic 
nonfinancial debt has grown at a rate a bit above the midpoint of its 
monitoring range 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 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, July 11, 1995.
Donald L. Kohn,
Secretary, Federal Open Market Committee.
[FR Doc. 95-17412 Filed 7-14-95; 8:45 am]
BILLING CODE 6210-01-F