[Federal Register Volume 65, Number 36 (Wednesday, February 23, 2000)]
[Notices]
[Page 8977]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-4216]


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FEDERAL RESERVE SYSTEM


Federal Open Market Committee; Domestic Policy Directive of 
December 21, 1999

    In accordance with Sec. 71.5 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 21, 1999.\1\
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    \1\ Copies of the Minutes of the Federal Open Market Committee 
meeting of December 21, 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, DC 
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 strong 
expansion of economic activity. Nonfarm payroll employment increased 
substantially further in October and November, and the civilian 
unemployment rate stayed at 4.1 percent in November, its low for the 
year. Manufacturing output recorded sizable gains in October and 
November. Total retail sales rose appreciably over the two months. 
Housing activity has softened somewhat over recent months but has 
remained at a high level. Trends in orders suggest that business 
spending on capital equipment has increased further. The U.S. nominal 
trade deficit in goods and services rose in October from its average in 
the third quarter. Aggregate price increases have been smaller in the 
past two months, reflecting a flattening in energy prices; labor 
compensation rates have been rising more slowly than last year.
    Most market interest rates are up somewhat since the meeting on 
November 16, 1999. Measures of share prices in equity markets have 
risen further 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 November while M3 
surged. For the year through November, M2 and M3 are estimated to have 
increased at rates somewhat above the Committee's annual ranges for 
1999. Total domestic nonfinancial debt has expanded at a pace in the 
upper end 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 maintaining the 
federal funds rate at 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, February 10, 2000.
Donald L. Kohn,
Secretary, Federal Open Market Committee.
[FR Doc. 00-4216 Filed 2-22-00; 8:45 am]
BILLING CODE 6210-01-P