[Federal Register Volume 64, Number 33 (Friday, February 19, 1999)]
[Notices]
[Pages 8374-8375]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-4081]
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FEDERAL RESERVE SYSTEM
Federal Open Market Committee; Domestic Policy Directive of
December 22, 1998.
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 22, 1998.\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 22, 1998, 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 the economy
has continued to expand at a brisk pace in recent months. Growth in
nonfarm payroll employment was strong in November, after more moderate
gains in September and October, and the civilian unemployment rate fell
to 4.4 percent. Total industrial production declined somewhat in
November, but manufacturing output was stable and up considerably from
the third-quarter pace. Business inventory accumulation slowed
appreciably in October after a sizable rise in the third quarter. The
nominal deficit on U.S. trade in goods and services narrowed slightly
in October from its third-quarter average. Total retail sales rose
sharply in October and November, and housing starts were strong as
well. Available indicators point to a considerable pickup in business
capital spending after a lull in the third quarter. Trends in various
measures of wages and prices have been mixed in recent months.
Most short-term interest rates have changed little on balance since
the meeting on November 17, but longer-term rates have declined
somewhat. Share prices in equity markets have remained volatile and
have posted sizable gains on balance over the intermeeting period. In
foreign exchange markets, the trade-weighted value of the dollar has
declined slightly over the period in relation to other major
[[Page 8375]]
currencies and in terms of an index of the currencies of other
countries that are important trading partners of the United States.
M2 and M3 have posted very large increases in recent months. For
the year through November, both aggregates rose at rates well above the
Committee's annual ranges. Total domestic nonfinancial debt has
expanded in recent months at a pace somewhat above 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
reaffirmed at its meeting on June 30-July 1 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 1997 to
the fourth quarter of 1998. The range for growth of total domestic
nonfinancial debt was maintained at 3 to 7 percent for the year. For
1999, the Committee agreed on a tentative basis to set the same ranges
for growth of the monetary aggregates and debt, measured from the
fourth quarter of 1998 to the fourth quarter of 1999. 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.
To promote the Committee's long-run objectives of price stability
and sustainable economic growth, the Committee in the immediate future
seeks conditions in reserve markets consistent with maintaining the
federal funds rate at an average of around 4-3/4 percent. In view of
the evidence currently available, the Committee believes that
prospective developments are equally likely to warrant an increase or a
decrease in the federal funds rate operating objective during the
intermeeting period.
By order of the Federal Open Market Committee, February 10,
1999.
Donald L. Kohn,
Secretary, Federal Open Market Committee.
[FR Doc. 99-4081 Filed 2-18-98; 8:45 am]
BILLING CODE 6210-01-F
