[Federal Register Volume 61, Number 174 (Friday, September 6, 1996)]
[Notices]
[Pages 47129-47130]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-22805]


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FEDERAL RESERVE SYSTEM

Federal Open Market Committee; Domestic Policy Directive of July 
2-3, 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 July 2-3, 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 July 2-3, 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 economic 
activity advanced considerably further in the second quarter, but 
increases in final demand showed some signs of moderation. Nonfarm 
payroll employment was up substantially in April and May; the civilian 
unemployment rate rose to 5.6 percent in May. Industrial production 
increased appreciably further in May, reflecting gains across a wide 
range of industries. Real consumer spending rose substantially on 
balance over April and May. Single-family housing starts fell 
considerably in May from a relatively high level in April. Orders and 
contracts point to some deceleration in spending on business equipment 
and nonresidential structures after a very rapid expansion earlier in 
the year. The nominal deficit on U.S. trade in goods and services 
widened in April from its rate in the first quarter. Upward pressures 
on food and energy prices have led to somewhat larger increases in the 
consumer price index over recent months.
    Most Market interest rates have edged higher since the Committee 
meeting on May 21. In foreign exchange markets, the trade-weighted 
value of the dollar in terms of the other G-10 currencies has 
depreciated slightly over the intermeeting period.
    M2 declined in May, though partial data for June pointed to a 
rebound. Growth of M3 was relatively sluggish in May but also appears 
to have turned up in June. For the year through June, both aggregates 
are estimated to have grown at rates around the upper bounds of

[[Page 47130]]

their respective ranges for the year. Expansion in total domestic 
nonfinancial debt has been moderate on balance over recent months and 
has remained in the middle portion of its 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 
reaffirmed at this meeting the ranges it had established in January 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 
maintained at 3 to 7 percent for the year. For 1997 the Committee 
agreed on tentative ranges for monetary growth, measured from the 
fourth quarter of 1996 to the fourth quarter of 1997, of 1 to 5 percent 
for M2 and 2 to 6 percent for M3. The Committee provisionally set the 
associated monitoring range for growth of total domestic nonfinancial 
debt at 3 to 7 percent for 1997. 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, August 28, 1996.
Donald L. Kohn,
Secretary, Federal Open Market Committee.
[FR Doc. 96-22805 Filed 9-5-96; 8:45 am]
BILLING CODE 6210-01-F