[Federal Register Volume 62, Number 109 (Friday, June 6, 1997)]
[Notices]
[Pages 31102-31103]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-14793]


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FEDERAL RESERVE SYSTEM


Federal Open Market Committee; Domestic Policy Directive of March 
25, 1997

    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 March 25, 1997.\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 March 25, 1997, 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 relatively 
strong economic growth has continued in the first quarter. Private 
nonfarm payroll employment increased substantially further in January 
and February, and the civilian unemployment rate, at 5.3 percent in 
February, was unchanged from its level in the second half of 1996. 
Industrial production rose moderately on balance in January and 
February. Nominal retail sales increased sharply further over January 
and February after a considerable advance in the fourth quarter. 
Housing activity strengthened markedly over January and February, 
though much of the rise probably related to unusually favorable 
weather. Recent data on orders and contracts point to a further sizable 
gain in business fixed investment in the first quarter. The nominal 
deficit on U.S. trade in goods and services widened substantially in 
January from its temporarily depressed rate in the fourth quarter. 
Underlying price inflation has remained subdued.
    Most market interest rates have risen somewhat since the Committee 
meeting on February 4-5, 1997. In foreign exchange markets, the trade-
weighted value of the dollar in terms of the other G-10 currencies 
increased further over the intermeeting period.
    Growth of M2 moderated somewhat in January and February from a 
brisk pace over the fourth quarter while the expansion of M3 remained 
relatively robust; data for the first part of March pointed to 
diminished growth in both aggregates. Total domestic nonfinancial debt 
has expanded moderately 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

[[Page 31103]]

Committee at its meeting in February 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 1996 to the fourth quarter of 1997. 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 increase 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 might be acceptable in the intermeeting period. The 
contemplated reserve conditions are expected to be consistent with some 
moderation in the expansion of M2 and M3 over coming months.
    By order of the Federal Open Market Committee, May 30, 1997.
Donald L. Kohn,
Secretary, Federal Open Market Committee.
[FR Doc. 97-14793 Filed 6-5-97; 8:45 am]
BILLING CODE 6210-01-F