[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