[Federal Register Volume 65, Number 6 (Monday, January 10, 2000)]
[Notices]
[Pages 1391-1392]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-433]


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FEDERAL RESERVE SYSTEM


Federal Open Market Committee; Domestic Policy Directive of 
November 16, 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 November 16, 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 November 16, 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 increased 
appreciably on average over September and October, and the civilian 
unemployment rate dropped to 4.1 percent in October, its low for the 
year. Industrial production recorded a strong gain in October after 
having been depressed in September by the effects of hurricane Floyd. 
Total retail sales were flat in September and October owing to a drop 
in sales at auto dealers; sales at other stores were fairly robust. 
Housing activity softened somewhat over the summer but has remained at 
a high level. Trends in orders suggest that business spending on 
capital equipment has continued to increase. The July-August deficit in 
U.S. trade in goods and services was higher than its average in the 
second quarter, as further growth in imports exceeded the rise in 
exports. Inflation has continued at a moderate pace, though above that 
in 1998 owing to a sharp rebound in energy prices. Labor compensation 
rates have been rising more slowly than last year.
    Most market interest rates have posted small mixed changes since 
the meeting on October 5, 1999. However, measures of share prices in 
equity markets have registered sizable increases over the intermeeting 
period. In foreign exchange markets, the trade-weighted value of the 
dollar has changed little over the period in relation to the currencies 
of a broad group of important U.S. trading partners.
    M2 continued to grow at a moderate pace in October while M3 
accelerated. For the year through October, M2 and M3 are estimated to 
have increased at rates somewhat above the Committee's annual ranges 
for 1999. Total domestic nonfinancial debt has continued to

[[Page 1392]]

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 5-1/2 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, December 27, 
1999.
Donald L. Kohn,
Secretary, Federal Open Market Committee.
[FR Doc. 00-433 Filed 1-7-00; 8:45 am]
BILLING CODE 6210-01-F