FRB年度报告-ann98_405页_1mb

1998 Federal Reserve Annual Report Summary

Core Content

The 85th Annual Report of the Board of Governors of the Federal Reserve System for the calendar year 1998 provides a comprehensive overview of U.S. monetary policy, economic developments, and regulatory activities. It highlights the performance of the U.S. economy, the impact of global economic conditions, and the Federal Reserve's responses to these challenges.

Main Economic Developments

Domestic Economy

• Growth and Inflation: The U.S. economy expanded rapidly in 1998, with the unemployment rate falling to its lowest level since 1970 and inflation remaining subdued.
• Monetary Policy: The Federal Reserve focused on balancing inflationary pressures and the risk of a slowdown in aggregate demand.
• Interest Rates: The Federal Open Market Committee (FOMC) adjusted interest rates multiple times during the year, lowering the federal funds rate by a total of 3/4 percentage point in the fall, and shifting from an asymmetric to a symmetric directive.
• Real GDP Growth: Real GDP increased by more than 4% over the year, driven by strong household and business expenditures, despite a slowdown in exports due to global economic weakness.

Sectoral Analysis

• Household Sector:

  • Personal consumption expenditures rose over 5% in real terms, the largest gain in a decade and a half.
  • The personal saving rate declined to an annual average of 1/2 percent, largely due to the rise in household net worth, which increased by over 10% from the end of 1997.
  • Housing affordability improved as mortgage rates declined and home prices rose slightly faster than overall inflation, leading to a new high in the home-ownership rate.
  • Residential investment increased by about 12 3/4% in real terms, driven by strong construction activity and home improvement spending.

• Business Sector:

  • Businesses invested heavily in new capital equipment, supported by a low cost of capital and optimism about future profitability.
  • Despite disruptions in financial markets, credit remained available from alternative sources, allowing continued business investment.

• Government Sector:

  • Budgetary restraint at the federal level helped maintain low interest rates and supported national saving.
  • The Federal Reserve's monetary policy helped sustain economic growth while keeping inflation in check.

• External Sector:

  • The U.S. trade deficit widened due to a strong dollar and weak foreign demand.
  • Real net exports deteriorated sharply, with exports stagnating and imports surging.

• Labor Market and Prices:

  • Labor markets tightened, contributing to subdued inflation.
  • Unit labor costs rose only modestly due to gains in labor productivity offsetting nominal wage increases.

• Financial Markets:

  • Financial markets experienced volatility due to global economic and financial strains, particularly from the Russian and Asian crises.
  • The dollar appreciated against the yen in the first half of the year, leading to the first U.S. foreign exchange intervention in nearly three years.
  • By mid-October, the dollar had depreciated against the yen, and financial market volatility persisted.

Key Regulatory and Policy Activities

• Regulatory Actions:

  • The Board of Governors issued several regulatory rules and policy statements, including updates to consumer protection regulations and changes to lending and credit practices.
  • These included regulations related to credit opportunities, electronic fund transfers, and the enforcement of consumer laws.

• Monetary Policy Reports:

  • The Federal Reserve provided reports to Congress on February 24, 1998, and July 21, 1998, detailing its monetary policy actions and economic outlook.

• International Developments:

  • The Russian crisis and the Asian financial turmoil significantly affected global financial markets.
  • The U.S. responded with monetary easing to mitigate the effects of financial strains both abroad and at home.
  • The launch of the euro marked the final stage of European Economic and Monetary Union.

• Federal Reserve Banks:

  • The report includes financial statements and statistical tables for the Federal Reserve Banks, detailing their operations, holdings, and financial performance.
  • It also outlines developments in currency, fiscal agency services, and information technology within the system.

Summary of Key Policy Actions

• Discount Rates: The discount rate was reduced by 1/4 percentage point on three occasions during the year.
• Monetary Policy: The FOMC adopted a symmetric directive in late 1998, indicating a balanced approach to managing inflation and economic growth.
• Financial Market Stability: The Federal Reserve's actions aimed to stabilize domestic financial conditions and reduce the impact of global financial strains.

Conclusion

The 1998 annual report underscores the resilience of the U.S. economy in the face of global economic challenges, the effectiveness of sound monetary and fiscal policies in maintaining growth and price stability, and the importance of regulatory actions in supporting consumer and business confidence. The Federal Reserve's proactive approach to monetary policy and financial market stability played a crucial role in mitigating the effects of international crises and ensuring continued economic expansion.