FOMC Minutes

Meeting of the Federal Open Market Committee

November 17. 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, November 17, 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.

Mr.

Kohn, Secretary and Economist

Bernard, Deputy Secretary

Coyne, Assistant Secretary

Gillum, Assistant Secretary

Mattingly, General Counsel

Patrikis, Deputy General Counsel

Prell, Economist

Truman, Economist

Messrs. J. Davis, R. Davis, T. Davis, Ms. Munnell,

Messrs. Lindsey, Promisel, Siegman, and

Stockton, Associate Economists

Mr. McDonough, Manager of the System Open Market

Account

Ms. Greene, Deputy Manager for Foreign

Operations

Ms. Lovett, Deputy Manager for Domestic

Operations

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. Wiles, Secretary, Office of the Secretary,

Board of Governors

Mr. Winn,1/ Assistant to the Board, Office of Board

Members, Board of Governors

Assistant Director, Division of

Mr. Porter,

Monetary Affairs, Board of Governors

Mr. Siciliano,1/ Senior Attorney, Legal Division,

Board of Governors

Mr. Feinman,2/ Economist, Division of Monetary Affairs,

Board of Governors

Mr. Moore,1/ Special Assistant to the Board, Office of

Board Members, Board of Governors

Ms. Low, Open Market Secretariat Assistant,

Division of Monetary Affairs, Board of Governors

Messrs. Beebe, Broaddus, Dewald, Lang, Rosenblum,

Scheld, and Ms. Tschinkel, Senior Vice Presidents,

Federal Reserve Banks of San Francisco, Richmond,

St. Louis, Philadelphia, Dallas, Chicago, and

Atlanta, respectively

Mr. Guentner, Assistant Vice President, Federal Reserve

Bank of New York

Mr. Weber, Senior Research Officer, Federal Reserve

Bank of Minneapolis

By unanimous vote, the minutes of actions taken at the

meeting of the Federal Open Market Committee held on October 6, 1992,

were approved.

By unanimous vote, the Committee authorized the renewal for

further periods of one year of the System's reciprocal currency

("swap") arrangements having the amounts and maturity dates indicated

below:

1.

2.

Attended portion of meeting relating to Congressional request

for more detailed and prompt reports of Committee delibera

tions.

Attended portion of meeting pertaining to a review of the

Committee's tentative ranges for monetary growth in 1993.

-3-

Amount of

arrangement

(millions of

$ equivalent)

$

250.0

3,000.0

5,000.0

700.0

250.0

300.0

4,000.0

Term

(months)

12 mos.

"

"

"

Maturity

date

12/04/92

12/04/92

12/04/92

12/04/92

12/04/92

12/04/92

12/04/92

600.0

12/04/92

1,250.0

12/04/92

12/18/92

12/28/92

12/28/92

12/28/92

12/28/92

12/28/92

1,000.0

2,000.0

250.0

2,000.0

6,000.0

3,000.0

500.0

""

"

Foreign Bank

Austrian National Bank

Bank of England

Bank of Japan

Bank of Mexico

Bank of Norway

Bank of Sweden

Swiss National Bank

Bank for International

SettlementsSwiss francs

Other authorized

European currencies

National Bank of Belgium

Bank of Canada

National Bank of Denmark

Bank of France

German Federal Bank

Bank of Italy

Netherlands Bank

12/28/92

By unanimous vote, System open market transactions in government

securities and federal agency obligations during the period October 6,

1992, through November 16, 1992, were ratified.

By unanimous vote, paragraph l.A of the Authorization for Domestic

Open Market Operations was amended to raise from $8 billion to $11 billion

the dollar limit on intermeeting changes in System Account holdings of U.S.

government and federal agency securities for the intermeeting period

through December 22, 1992.

With Messrs, Jordan, LaWare, and Melzer dissenting, 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

that economic activity has been expanding at a moderate

pace. Total nonfarm payroll employment was up slightly

in October after declining in the previous two months,

and the civilian unemployment rate edged down to 7.4

percent. Industrial production rose somewhat in

October. Retail sales increased considerably in

September and October. There was some strengthening

in residential construction activity over the summer

months. Outlays for business equipment have continued

to increase, and recent data on orders for nondefense

capital goods point to further growth in the near term;

expenditures for nonresidential construction have

remained weak. The nominal U.S. merchandise trade

deficit widened somewhat in July-August from its

average rate in the second quarter. Recent data on

wages and prices have been mixed but suggest on balance

a continuing trend toward lower inflation.

Most interest rates have increased appreciably

since the Committee meeting on October 6. In foreign

exchange markets, the trade-weighted value of the

dollar in terms of the other G-10 currencies rose very

substantially over the intermeeting period.

M2 has expanded at a moderate pace since mid

summer, with all of its growth stemming from its Ml

component, while M3 grew slowly. Through October, both

aggregates were estimated to have grown at rates a

little below the lower ends of the ranges established

by the Committee for the year.

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 on June 30-July 1 reaffirmed the ranges it had

established in February 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 Committee anticipated that

developments contributing to unusual velocity increases

could persist in the second half of the year. The

monitoring range for growth of total domestic non

financial debt also was maintained at 4-1/2 to 8-1/2

percent for the year. For 1993, the Committee on a

tentative basis set the same ranges as in 1992 for

growth of the monetary aggregates and debt measured

from the fourth quarter of 1992 to the fourth quarter

of 1993.

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 September through December at annual rates of

about 3-1/2 and 1 percent, respectively.

It was agreed that the next meeting of the Committee would

be held on Monday, December 21, 1992.

30/

The meeting adjourned.

Secretary

3.

Secretary's note:

Following the meeting, in response to

requests from several members, Chairman Greenspan changed

the meeting date to Tuesday, December 22, 1992.