[Federal Register Volume 61, Number 4 (Friday, January 5, 1996)]
[Notices]
[Pages 411-412]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-177]



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[[Page 412]]


FEDERAL RESERVE SYSTEM


Federal Open Market Committee; Domestic Policy Directive of 
November 15, 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 November 15, 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 November 15, 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 moderation in 
the expansion of economic activity after a strong gain in the third 
quarter. Nonfarm payroll employment increased further in October and 
the civilian unemployment rate edged down to 5.5 percent. Industrial 
production fell somewhat in October after a moderate rise in the third 
quarter. Total nominal retail sales were little changed on balance over 
September and October. Single-family housing starts were up 
considerably in the third quarter. Orders for nondefense capital goods 
point to substantial expansion of spending on business equipment in the 
near term; nonresidential construction has risen appreciably further. 
The nominal deficit on U.S. trade in goods and services narrowed over 
July and August from its average rate in the second quarter. After 
increasing at elevated rates in the early part of the year, consumer 
and producer prices have risen more slowly on average in recent months.
    Short-term market interest rates have changed little on balance 
since the Committee meeting on September 26 while long-term rates have 
fallen somewhat. In foreign exchange markets, the trade-weighted value 
of the dollar in terms of the other G-10 currencies has declined 
slightly over the intermeeting period.
    In October, M2 was unchanged and M3 growth moderated. For the year 
through October, M2 expanded at a rate in the upper half of its range 
for 1995 and M3 grew at a rate a little above its range. Growth in 
total domestic nonfinancial debt has slowed somewhat in recent months 
but for the year to date remains around the midpoint 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 
its meeting in July reaffirmed the range it had established on January 
31-February 1 for growth of M2 of 1 to 5 percent, measured from the 
fourth quarter of 1994 to the fourth quarter of 1995. The Committee 
also retained the monitoring range of 3 to 7 percent for the year that 
it had set for growth of total domestic nonfinancial debt. The 
Committee raised the 1995 range for M3 to 2 to 6 percent as a technical 
adjustment to take account of changing intermediation patterns. For 
1996, the Committee established on a tentative basis the same ranges as 
in 1995 for growth of the monetary aggregates and debt, measured from 
the fourth quarter of 1995 to the fourth quarter of 1996. 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, 
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 moderate growth 
in M2 or M3 over coming months.
    By order of the Federal Open Market Committee, December 27, 
1995.
Donald L. Kohn,
Secretary, Federal Open Market Committee.
[FR Doc. 96-177 Filed 1-4-96; 8:45 am]
BILLING CODE 6210-01-F