[Federal Register Volume 64, Number 202 (Wednesday, October 20, 1999)]
[Notices]
[Pages 56506-56507]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-27315]


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FEDERAL RESERVE SYSTEM


Federal Open Market Committee; Domestic Policy Directive of 
August 24, 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 August 24, 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 August 24, 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 solid 
expansion of economic activity. Nonfarm payroll employment has 
increased rapidly in recent months, and the civilian unemployment rate, 
at 4.3 percent in July, matched its average for the first half of the 
year. Manufacturing output continued to grow moderately on average in 
June and July. Total retail sales have grown less rapidly in recent 
months, while housing activity has

[[Page 56507]]

remained robust. Available indicators suggest that the expansion in 
business capital spending has slackened somewhat after a surge this 
spring. The nominal deficit on U.S. trade in goods and services widened 
substantially in the second quarter. Consumer price inflation has been 
boosted in recent months by an appreciable rise in energy prices; 
against the background of very tight labor markets, increases in wages 
and total compensation have been somewhat larger.
    Most interest rates are little changed on balance since the meeting 
on June 29-30, 1999. Key measures of share prices in equity markets 
have posted mixed changes over the intermeeting period. In foreign 
exchange markets, the trade-weighted value of the dollar has declined 
slightly over the period in relation to the currencies of a broad group 
of important U.S. trading partners.
    M2 and M3 have grown at a moderate pace in recent months. For the 
year through July, M2 is estimated to have increased at a rate somewhat 
above the Committee's annual range and M3 at a rate approximating the 
upper end of 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 
reaffirmed at its meeting in June 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 1998 to the fourth 
quarter of 1999. The range for growth of total domestic nonfinancial 
debt was maintained at 3 to 7 percent for the year. For 2000, the 
Committee agreed on a tentative basis in June to retain the same ranges 
for growth of the monetary aggregates and debt, measured from the 
fourth quarter of 1999 to the fourth quarter of 2000. 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 increasing the 
federal funds rate to an average of around 5-1/4 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, October 13, 1999.
Donald L. Kohn,
Secretary, Federal Open Market Committee.
[FR Doc. 99-27315 Filed 10-19-99; 8:45 am]
BILLING CODE 6210-01-F