[Federal Register: September 13, 1999 (Volume 64, Number 176)]
[Notices]               
[Page 49495]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr13se99-91]                         

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FEDERAL RESERVE SYSTEM

Federal Open Market Committee; Domestic Policy Directive of June 
29-30, 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 June 29-30, 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 June 29-30, 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 has 
increased at a relatively rapid pace in recent months and the civilian 
unemployment rate, at 4.2 percent in May, matched its low for the year. 
Manufacturing output rose substantially further in May. Total retail 
sales increased briskly last month after recording large gains on 
average earlier in the year. Housing activity has remained robust in 
recent months. Available indicators suggest that business capital 
spending, especially for information technology, has accelerated this 
spring. The nominal deficit on U.S. trade in goods and services widened 
somewhat in April from its first-quarter average. Consumer price 
inflation was up somewhat on balance in April and May, boosted by a 
sharp increase in energy prices; improving productivity has held down 
increases in unit labor costs despite very tight labor markets.
    Interest rates have risen somewhat since the meeting on May 18, 
1999. Key measures of share prices in equity markets are unchanged to 
somewhat lower on balance 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.
    After recording sizable increases in April, apparently owing to a 
tax-related buildup in liquid accounts, growth of M2 and M3 slowed in 
May as tax payments cleared and appears to have remained moderate in 
June. For the year through June, M2 is estimated to have increased at a 
rate somewhat above the Committee's annual range and M3 at a rate near 
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 this meeting 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 to set 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 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, September 3, 
1999.
Donald L. Kohn,
Secretary, Federal Open Market Committee.
[FR Doc. 99-23690 Filed 9-10-99; 8:45 am]
BILLING CODE 6210-01-F