[Federal Register Volume 61, Number 136 (Monday, July 15, 1996)]
[Notices]
[Page 36885]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-17835]


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FEDERAL RESERVE SYSTEM

Federal Open Market Committee; Domestic Policy Directive of May 
21, 1996

    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 21, 1996.\1\ The directive was issued to the 
Federal Reserve Bank of New York as follows:
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    \1\ Copies of the Minutes of the Federal Open Market Committee 
meeting of May 21, 1996, 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, on balance, 
economic activity has grown moderately in recent months. Nonfarm 
payroll employment changed little in April after rising substantially 
in the first quarter; the civilian unemployment rate fell to 5.4 
percent. Industrial production increased sharply in April, largely 
reflecting a rebound in motor vehicle assemblies after a strike in 
March. Retail sales declined somewhat in April after posting a strong 
gain in the first quarter. Single-family housing starts rose 
considerably in April. Orders and contracts point to some deceleration 
in spending on business equipment and nonresidential structures after a 
very rapid expansion in the first quarter. The nominal deficit on U.S. 
trade in goods and services widened significantly in the first quarter 
from its rate in the fourth quarter of last year. Upward pressures on 
food and energy prices have led to somewhat larger increases in the 
consumer price index over recent months.
    Short-term market interest rates have changed little while long-
term rates have risen somewhat further since the Committee meeting on 
March 26. In foreign exchange markets, the trade-weighted value of the 
dollar in terms of the other G-10 currencies has appreciated 
considerably over the intermeeting period.
    Growth of M2 and M3 slowed substantially in April after recording 
sizable increases earlier in the year. For the year through April, both 
aggregates grew at rates somewhat above the upper bounds of their 
respective ranges for the year. Expansion in total domestic 
nonfinancial debt remained moderate on balance over 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 in January established ranges for growth of M2 and M3 of 1 
to 5 percent and 2 to 6 percent respectively, measured from the fourth 
quarter of 1995 to the fourth quarter of 1996. The monitoring range for 
growth of total domestic nonfinancial debt was set at 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, 
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 and M3 over coming months.

    By order of the Federal Open Market Committee, July 8, 1996.
Donald L. Kohn,
Secretary, Federal Open Market Committee.
[FR Doc. 96-17835 Filed 7-12-96; 8:45 am]
BILLING CODE 6210-01-F