[Federal Register Volume 61, Number 31 (Wednesday, February 14, 1996)]
[Notices]
[Pages 5775-5776]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-3314]



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FEDERAL RESERVE SYSTEM

Federal Open Market Committee; Domestic Policy Directive of 
December 19, 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 December 19, 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 December 19, 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 substantial 
slowing in the expansion of economic activity after a strong gain in 
the third quarter. Nonfarm payroll employment increased further in 
November, but the civilian unemployment rate edged up to 5.6 percent. 
Industrial production was little changed on average over October and 
November after a moderate rise in the third quarter. Total nominal 
retail sales rose somewhat on balance over October and November. 
Housing starts were down in October after a large increase in the third 
quarter. However, orders for nondefense capital goods point to 
substantial expansion of spending on business equipment in the near 
term, and nonresidential construction has risen appreciably further. 
Wage trends have been stable and consumer prices have risen relatively 
slowly on average in recent months.
    Most market interest rates have declined slightly since the 
Committee meeting on November 15. In foreign exchange markets, the 
trade-weighted value of the dollar in terms of the other G-10 
currencies has risen slightly on balance over the intermeeting period.
    The substantial moderation in the growth of M2 and M3 since 
midsummer continued in November; however, for the year through 
November, M2 expanded at a rate in the upper half of its range for 1995 
and M3 grew at a rate at the upper end of 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 decrease slightly 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

[[Page 5776]]

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, February 7, 1996.
Donald L. Kohn,
Secretary, Federal Open Market Committee.
[FR Doc. 96-3314 Filed 2-13-96; 8:45 am]
BILLING CODE 6210-01-F