[Federal Register Volume 64, Number 72 (Thursday, April 15, 1999)]
[Notices]
[Page 18619]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-9377]


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FEDERAL RESERVE SYSTEM


Federal Open Market Committee; Domestic Policy Directive of 
February 2-3, 1999

    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 February 2-3, 1999.\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 February 2-3, 1999, 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 
expanded rapidly in the closing months of 1998. Nonfarm payroll 
employment posted strong gains in November and December, and the 
civilian unemployment rate fell to 4.3 percent in December. Total 
industrial production strengthened in the fourth quarter, owing in 
large measure to a surge in the production of motor vehicles and parts. 
Total retail sales rose sharply in the fourth quarter, and home sales 
and housing starts increased appreciably. Available indicators suggest 
that business capital spending picked up markedly in the fourth quarter 
after a lull in the third. In November, the nominal deficit on U.S. 
trade in goods and services was somewhat larger than in October, but 
the combined October-November deficit was slightly smaller than its 
third-quarter average. Inflation has remained subdued despite very 
tight labor markets.
    Most short-term interest rates have declined somewhat on balance 
since the meeting on December 22, while longer-term rates have changed 
little. Share prices in equity markets have posted further sizable 
gains on balance over the intermeeting period. In foreign exchange 
markets, the trade-weighted value of the dollar has depreciated 
slightly over the period in relation to other major currencies but it 
has appreciated somewhat in terms of the currencies of a broader group 
that also includes other important trading partners of the United 
States.
    M2 and M3 continued to record very large increases in late 1998, 
but available data pointed to some moderation in January. From the 
fourth quarter of 1997 to the fourth quarter of 1998, both aggregates 
rose at rates well above the Committee's annual ranges. Total domestic 
nonfinancial debt expanded at a pace somewhat above the middle of its 
range in 1998.
    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 
this meeting established ranges for growth of M2 and M3 of 1 to 5 
percent and 2 to 6 percent respectively, measured from the fourth 
quarter of 1998 to the fourth quarter of 1999. The range for growth of 
total domestic nonfinancial debt was set at 3 to 7 percent for the 
year. 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, April 7, 1999.
Donald L. Kohn,
Secretary, Federal Open Market Committee.
[FR Doc. 99-9377 Filed 4-14-99; 8:45 am]
BILLING CODE 6210-01-F