[Federal Register Volume 64, Number 132 (Monday, July 12, 1999)]
[Notices]
[Page 37536]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-17607]


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FEDERAL RESERVE SYSTEM


Federal Open Market Committee; Domestic Policy Directive of May 
18, 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 May 18, 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 May 18, 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 continued 
vigorous expansion in economic activity. Nonfarm payroll employment 
moderated on balance over March and April, and the civilian 
unemployment rate in April matched its first-quarter average. Total 
industrial production increased substantially in March and April. Total 
retail sales edged up in April after recording large gains earlier in 
the year. Housing starts fell in April. Available indicators suggest 
that growth of business capital spending has remained relatively rapid. 
The nominal deficit on U.S. trade in goods and services widened 
substantially in January and February from its fourth-quarter average. 
Consumer prices rose substantially in April, boosted by a sharp 
increase in energy prices; labor costs have remained quiescent thus far 
this year despite very tight labor markets.
    Interest rates on Treasury securities have arisen appreciably since 
the meeting on March 30, 1999, with the largest increases concentrated 
in intermediate- and long-term maturities; rates on private obligations 
show mixed changes over the period. Most key measures of share prices 
in equity markets have registered sizable gains over the intermeeting 
period. In foreign exchange markets, the trade-weighted value of the 
dollar has depreciated somewhat over the period in relation to the 
currencies of a broad group of important U.S. trading partners.
    M2 and M3 recorded sizable increases in April, apparently owing to 
a tax-related buildup in liquid accounts. For the year through April, 
M2 is estimated to have increased at a rate somewhat above the 
Committee's annual range and M3 at a rate slightly above its range. 
Total domestic nonfinancial debt has continued to expand 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 at 
its meeting in February 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 more likely to warrant an increase than a 
decrease in the federal funds rate operating objective during the 
intermeeting period.

    By order of the Federal Open Market Committee, July 6, 1999.
Donald L. Kohn,
Secretary, Federal Open Market Committee.
[FR Doc. 99-17607 Filed 7-9-99; 8:45 am]
BILLING CODE 6210-01-F