[Federal Register Volume 61, Number 229 (Tuesday, November 26, 1996)]
[Notices]
[Page 60102]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-30200]


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FEDERAL RESERVE SYSTEM

Federal Open Market Committee; Domestic Policy Directive of 
September 24, 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 September 24, 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 September 24, 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 has moderated appreciably from an elevated second-
quarter pace. Private nonfarm payroll employment grew less rapidly over 
July and August than in the second quarter, while the civilian 
unemployment rate declined to 5.1 percent in August. Industrial 
production increased somewhat less rapidly on average in July and 
August than in the prior few months. Total retail sales rose slightly 
over July and August after having declined substantially in June. 
Housing starts in July and August were unchanged on average from their 
second-quarter level. Demand for business equipment has remained 
strong, while spending on nonresidential structures has changed little 
on balance in recent months. The nominal deficit on U.S. trade in goods 
and services widened substantially in July from its average in the 
second quarter. Increases in labor compensation have been somewhat 
larger this year, but consumer price inflation, excluding its food and 
energy components, has edged lower.
    Most market interest rates have risen somewhat on balance since the 
Committee meeting on August 20, 1996. In foreign exchange markets, the 
trade-weighted value of the dollar in terms of the other G-10 
currencies has appreciated slightly over the intermeeting period.
    Growth of M2 and M3 picked up in August, but they continued to 
expand at rates below those in the first half of the year. For the year 
through August, both aggregates are estimated to have grown at rates in 
the upper portions 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, November 20, 
1996.
Donald L. Kohn,
Secretary, Federal Open Market Committee.
[FR Doc. 96-30200 Filed 11-25-96; 8:45 am]
BILLING CODE 6210-01-F