[Federal Register Volume 61, Number 195 (Monday, October 7, 1996)]
[Notices]
[Pages 52453-52454]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-25581]


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FEDERAL RESERVE SYSTEM

Federal Open Market Committee; Domestic Policy Directive of 
August 20, 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 August 20, 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 August 20, 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 growth in 
economic activity recently has moderated somewhat. Private nonfarm 
payroll employment grew less rapidly in July, the average workweek fell 
sharply, and the civilian unemployment rate edged up to 5.4 percent. 
Industrial production increased slightly in July after three months of 
strong gains. Real consumer spending weakened somewhat on balance over 
June and July following several months of robust growth. Housing starts 
fell somewhat further in July. Growth in spending on

[[Page 52454]]

business equipment and nonresidential structures has slowed after a 
very rapid expansion earlier in the year. The nominal deficit on U.S. 
trade in goods and services widened in the second quarter from its rate 
in the first quarter. Increases in labor compensation have been 
somewhat larger this year, but consumer price inflation, adjusted for 
food and energy prices, has remained on a fairly steady trend.
    Most short-term market interest rates have declined slightly while 
intermediate- and long-term rates have fallen somewhat more since the 
Committee meeting on July 2-3, 1996. 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.
    Growth of M2 and M3 moderated in July. For the year through July, 
both aggregates are estimated to have grown at rates somewhat below the 
upper bounds of 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 at 
its meeting in July reaffirmed 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 a tentative basis to set the same ranges 
as in 1996 for growth of the monetary aggregages and debt, measured 
from the fourth quarter of 1996 to the fourth quarter of 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, September 30, 
1996.
Donald L. Kohn,
Secretary, Federal Open Market Committee.
[FR Doc. 96-25581 Filed 10-4-96; 8:45 am]
BILLING CODE 6210-01-F