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It emphasizes the goal of stable prices to support maximum sustainable output and employment, with announced target ranges for M2 and M3, and monitoring for DNFD. It also evaluates how flexible monetary targeting and the informational value of the ranges affect communication of long-run objectives.",{"@graph":14,"@context":73},[15,34,56],{"@type":16,"itemListElement":17},"BreadcrumbList",[18,23,27,31],{"item":19,"name":20,"@type":21,"position":22},"https://docshare.wps.com","Home","ListItem",1,{"item":24,"name":25,"@type":21,"position":26},"https://docshare.wps.com/document/","Document",2,{"item":28,"name":29,"@type":21,"position":30},"https://docshare.wps.com/document/research-report/","Research & 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Wang","Person",{"url":19,"name":45,"@type":46},"DocShare","Organization","application/pdf","2026-11-06","2026-09-21",true,{"@type":52,"interactionType":53,"userInteractionCount":55},"InteractionCounter",{"@type":54},"ViewAction",14,{"@type":57,"mainEntity":58},"FAQPage",[59,65,69],{"name":60,"@type":61,"acceptedAnswer":62},"What is the purpose of the Humphrey-Hawkins testimony process?","Question",{"text":63,"@type":64},"It requires the Federal Reserve to report monetary and credit target ranges to Congress in February and regularly provide information to the public on monetary policy intentions and procedures.","Answer",{"name":66,"@type":61,"acceptedAnswer":67},"What are the 1989 target ranges for M2, M3, and DNFD?",{"text":68,"@type":64},"For 1989, the report states M2 is 3 to 7 percent, M3 is 3.5 to 7.5 percent, and the monitoring range for DNFD is 6.5 to 10.5 percent.",{"name":70,"@type":61,"acceptedAnswer":71},"Why did the report emphasize flexible monetary targeting rather than rigid aggregates?",{"text":72,"@type":64},"Because the relationship between money aggregates and economic activity can vary, the FOMC emphasized assessing money growth alongside indicators of inflationary pressures, economic growth, and developments in financial and foreign exchange markets.","https://schema.org",{"og:url":32,"og:type":75,"og:title":10,"og:site_name":45,"og:description":12},"article",{"robots":77,"canonical":32},"index,follow",{"doc_id":79,"site_id":7},324784,1790135221,{"code":4,"msg":82,"data":83},"success",[84,88,92,96,101,106,111,115,120,123,127],{"id":22,"doc_module":4,"doc_module_name":25,"category_name":85,"show_sort_weight":86,"slug":87},"Story & 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before Congres-sional banking committees in Februaryto report the Federal Reserve's mone-tary policy objectives for 1989.His re-marks also included a review of policyactions and the economy during 1988.  \nThese reports are required by the FullEmployment and Balanced Growth Actof 1978,better known as theHumphrey-Hawkins(H-H)Act.The H-H Act states the federal govemment'smacroeconomic policy goals.Throughthis process,Congress and the publicregularly receive information about theFederal Reserve's monetary policy in-tentions and procedures.  \nThe Federal Reserve's ultimate policyobjective is to create a stable price en-vironment so that the economy canachieve maximum sustainable growthof output and employment.The targetranges for the M2 and M3 aggregatesare announced as a means to achievethat broader objective.  \nThe H-H Act requires the FederalReserve to report in February itsmoney and credit target ranges for thecurrent year,but this legislation wasenacted when the short-run relationshipbetween money and economic activityappeared to be more stable and predict-able than has been the case since theearly 1980s.Recognizing thatmonetary and economic activitygrowth rates may not move together as  \n# Communication and theHumphrey-Hawkins Process\n\nclosely as they once did,the FederalReserve's Federal Open Market Com-mittee(FOMC)has emphasized a moreflexible approach to monetary targetingover the past few years.  \nThis Economic Commentary reviewsthe Monetary Policy Report to Con-gress,examines the informationalvalue of the monetary target ranges,and discusses a possible improvementfor communicating the FOMC's long-run goals to the public in theHumphrey-Hawkins process  \n## ■ The 1989Monetary PolicyObjectives\n\nThe Federal Open Market Committeelowered the target ranges for moneyand credit expansion this year(seetable 1).The 1989 ranges,as measuredfrom the fourth quarter of 1988 to thefourth quarter of 1989,are3 to 7 per-cent for M2 and 3.5 to 7.5 percent for  \nM3.The monitoring range for domes-tic nonfinancial debt(DNFD)is 6.5 to  \n10.5 percent.The range for M2 wasreduced a full percentage point fromlast year,while the ranges for M3 andDNFD were each reduced one-half per-centage point.As in 1987 and 1988,norange was set for the M1 aggregate.  \nThe lower target ranges are an expres-sion of“...the Committee's determina-tion to resist any upward tendencies ininflation in the coming year and topromote progress toward price stability  \nApril 15,1989  \nThe Federal Reserve reports its mon-etary policy goals for the coming yearto Congress in what is known as theHumphrey-Hawkins testimony.Thereport includes a discussion of theeconomic projections of the FederalOpen Market Committee(FOMC)and of the Federal Reserve's targetranges for growth of the M2 and M3monetary aggregates.The processseems to work well for reportingshort-term goals,but perhaps couldbe improved upon to better communi-cate the Federal Reserve's long-termmonetary objectives.  \nin the long run.\"B The vigorous perfor-mance of the economy,and the signs ofrising inflation early in 1989made theCommittee more inclined towardrestraint than toward stimulus.  \nThe FOMC retained the four-percent-age-point-wide target ranges firstadopted for the broader aggregates in1988.The report noted that“...it is dif-ficult to specify in advance a narrowrange for the appropriate growth ofM2 and the other aggregates in thecoming year.B One reason for thisdifficulty is the significant interest-ratesensitivity of M2.Fairly wide devia-tions from the midpoint of the targetrange are possible as the opportunitycost of M2 fluctuates.M2 opportunitycost can be measured by the differencebetween the 3-month Treasury bill rateand the weighted-average of the ratespaid on M2's components.  \nDepository institutions were unusuallyslow to raise deposit rates as market in-terest rates increased during the secondhalf of 1988.Rising opportunity costwas reflected in slower M2 growth,and i","cbCaiuV0m0hTVu7o","https://ap.wps.com/l/cbCaiuV0m0hTVu7o","pdf",1117363,"English","# Communication and theHumphrey-Hawkins Process\n## The 1989Monetary PolicyObjectives\n## Economic Projections for 1989","[{\"question\":\"What is the purpose of the Humphrey-Hawkins testimony process?\",\"answer\":\"It requires the Federal Reserve to report monetary and credit target ranges to Congress in February and regularly provide information to the public on monetary policy intentions and procedures.\"},{\"question\":\"What are the 1989 target ranges for M2, M3, and DNFD?\",\"answer\":\"For 1989, the report states M2 is 3 to 7 percent, M3 is 3.5 to 7.5 percent, and the monitoring range for DNFD is 6.5 to 10.5 percent.\"},{\"question\":\"Why did the report emphasize flexible monetary targeting rather than rigid aggregates?\",\"answer\":\"Because the relationship between money aggregates and economic activity can vary, the FOMC emphasized assessing money growth alongside indicators of inflationary pressures, economic growth, and developments in financial and foreign exchange markets.\"}]","Communication and theHumphrey-Hawkins Process - Economic Commentary Review of the Monetary Policy Report | PDF",1789968859,13]