98-4105. Federal Open Market Committee; Domestic Policy Directive of December 16, 1997  

  • [Federal Register Volume 63, Number 33 (Thursday, February 19, 1998)]
    [Notices]
    [Page 8454]
    From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
    [FR Doc No: 98-4105]
    
    
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    FEDERAL RESERVE SYSTEM
    
    
    Federal Open Market Committee; Domestic Policy Directive of 
    December 16, 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 December 16, 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 December 16, 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 economic 
    activity continued to grow rapidly in recent months. Nonfarm payroll 
    employment increased sharply in October and November; the civilian 
    unemployment rate fell to 4.6 percent in November, its low for the 
    current economic expansion. Industrial production continued to advance 
    at a brisk pace in October and November. Retail sales were unchanged on 
    balance over the two months after rising sharply in the third quarter. 
    Housing starts increased slightly further in October and November. 
    Available information suggests on balance that business fixed 
    investment will slow from the exceptionally strong increases of the 
    second and third quarters. The nominal deficit on U.S. trade in goods 
    and services widened significantly in the third quarter from its rate 
    in the second quarter. Price inflation has remained subdued, despite 
    some increase in the pace of advance in wages.
        Short-term interest rates have registered small mixed changes since 
    the day before the Committee meeting on November 12, 1997, while bond 
    yields have fallen somewhat. Share prices in U.S. equity markets 
    recorded mixed changes over the period; equity markets in other 
    countries, notably in Asia, have remained volatile. In foreign exchange 
    markets, the value of the dollar has risen over the intermeeting period 
    in terms of both the trade-weighted index of the other G-10 countries 
    and the currencies of a number of Asian countries.
        M2 and M3 grew rapidly in November. For the year through November, 
    M2 expanded at a rate slightly above the upper bound of its range for 
    the year and M3 at a rate substantially above the upper bound of its 
    range. Total domestic nonfinancial debt has expanded in recent months 
    at a pace somewhat below the middle 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 
    February 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 range for growth of total domestic nonfinancial 
    debt was maintained at 3 to 7 percent for the year. For 1998, the 
    Committee agreed on a tentative basis to set the same ranges as in 1997 
    for growth of the monetary aggregates and debt, measured from the 
    fourth quarter of 1997 to the fourth quarter of 1998. 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 conditions in reserve markets consistent with 
    maintaining the federal funds rate at an average of around 5-1/2 
    percent. 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, a 
    slightly higher federal funds rate or a slightly lower federal funds 
    rate might be acceptable in the intermeeting period. The contemplated 
    reserve conditions are expected to be consistent with some moderation 
    in the growth in M2 and M3 over coming months.
        By order of the Federal Open Market Committee, February 9, 1998.
    Donald L. Kohn,
    Secretary, Federal Open Market Committee.
    [FR Doc. 98-4105 Filed 2-18-98; 8:45 am]
    BILLING CODE 6210-01-F
    
    
    

Document Information

Published:
02/19/1998
Department:
Federal Reserve System
Entry Type:
Notice
Document Number:
98-4105
Pages:
8454-8454 (1 pages)
PDF File:
98-4105.pdf