FOMC Minutes

Meeting of the Federal Open Market Committee

March 31, 1992

Minutes of Actions

A meeting of the Federal Open Market Committee was held in

the offices of the Board of Governors of the Federal Reserve System in

Washington, D.C., on Tuesday, March 31, 1992, at 9:00 a.m.

PRESENT:

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Ms.

Mr.

Greenspan, Chairman

Corrigan, Vice Chairman

Angell

Hoenig

Jordan

Kelley

LaWare

Lindsey

Melzer

Mullins

Phillips

Syron

Messrs. Boehne, Keehn, McTeer, and Stern, Alternate

Members of the Federal Open Market Committee

Messrs. Black, Forrestal, and Parry, Presidents of

the Federal Reserve Banks of Richmond,

Atlanta, and San Francisco, respectively

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Kohn, Secretary and Economist

Bernard, Deputy Secretary

Coyne, Assistant Secretary

Gillum, Assistant Secretary

Patrikis, Deputy General Counsel

Prell, Economist

Truman, Economist

Messrs. Balbach, J. Davis, R. Davis, T. Davis,

Promisel, Siegman, Simpson, and Stockton,

Associate Economists

Mr. Sternlight, Manager for Domestic Operations,

System Open Market Account

Mr. McDonough, Manager for Foreign Operations,

System Open Market Account

-2

Mr. Ettin, Deputy Director, Division of Research

and Statistics, Board of Governors

Mr. Slifman, Associate Director, Division of

Research and Statistics, Board of Governors

Mr. Madigan, Assistant Director, Division of

Monetary Affairs, Board of Governors

Ms. Low, Open Market Secretariat Assistant,

Division of Monetary Affairs, Board of

Governors

Messrs. Broaddus, Lang, Rosenblum, Scheld, and

Ms. Tschinkel, Senior Vice Presidents,

Federal Reserve Banks of Richmond, Philadelphia,

Dallas, Chicago, and Atlanta, respectively

Messrs. Fieleke, Judd, and Miller, Vice Presidents,

Federal Reserve Banks of Boston, San Francisco,

and Minneapolis, respectively

Ms. Krieger, Manager, Open Market Operations,

Federal Reserve Bank of New York

Secretary's Note: Prior to this meeting, notice

had been received that Mr. Jerry L. Jordan,

President of the Federal Reserve Bank of Cleveland,

had executed his Oath of Office as member of the

Federal Open Market Committee for the period

March 10, 1992 through December 31, 1992.

By unanimous vote, the minutes of actions taken at the

meeting of the Federal Open Market Committee held on February 4-5,

1992, were approved.

By unanimous vote, System open market transactions in foreign

currencies during the period February 5, 1992, through March 30, 1992,

were ratified.

By unanimous vote, System open market transactions in

government securities and federal agency obligations during the period

February 5, 1992, through March 30, 1992, were ratified.

By unanimous vote, the Federal Reserve Bank of New York was

authorized and directed, until otherwise directed by the Committee, to

execute transactions in the System Account in accordance with the

following domestic policy directive:

The information reviewed at this meeting suggests

a strengthening in domestic final spending, although

industrial production and overall employment do not

appear to have picked up correspondingly. Retail sales

registered large gains in January and February, with

data on inventories, which are available through

January, showing some offsetting decline in that month.

Single-family housing starts increased substantially

Recent data on orders

further in January and February.

and shipments of nondefense capital goods indicate an

increase in outlays for business equipment, but non

-residential construction has remained in a steep

decline.

The nominal U.S. merchandise trade deficit

narrowed slightly in January and was essentially

unchanged from its average rate in the fourth quarter.

Industrial production rose considerably in February,

partly reflecting an upturn in motor vehicle

assemblies, but was little changed on balance over the

Total nonfarm payroll

first two months of the year.

employment rebounded in February from a large decline

in January. With the labor force growing appreciably

in recent months, the civilian unemployment rate has

risen to 7.3 percent.

Wage and price increases have

continued to trend downward.

Most interest rates have risen appreciably since

In foreign

the Committee meeting on February 4-5.

exchange markets, the trade-weighted value of the

dollar in terms of the other G-10 currencies increased

substantially over the intermeeting period.

Growth of M2 and M3 accelerated in February, but

M2 appears to have leveled off and M3 to have declined

in March.

Much of the growth in the broader aggregates

over recent months has been accounted for by a surge in

transactions balances.

The Federal Open Market Committee seeks monetary

and financial conditions that will foster price sta

bility and promote sustainable growth in output.

In

furtherance of these objectives, the Committee at its

meeting in February established ranges for growth of M2

and M3 of 2-1/2 to 6-1/2 percent and 1 to 5 percent,

respectively, measured from the fourth quarter of 1991

to the fourth quarter of 1992.

The monitoring range

for growth of total domestic nonfinancial debt was set

at 4-1/2 to 8-1/2 percent for the year.

With regard to

M3, the Committee anticipated that the ongoing re

structuring of depository institutions would continue

to depress the growth of this aggregate relative to

spending and total credit.

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 might or slightly lesser reserve restraint

would be acceptable in the intermeeting period. The

contemplated reserve conditions are expected to be

consistent with growth of M2 and M3 over the period

-from March through June at annual rates of about 3-1/2

and 1-1/2 percent, respectively.

It was agreed that the next meeting of the Committee would

be held on Tuesday, May 19,

1992.

The meeting adjourned.

Secretary