Bluebook

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Content last modified 6/05/2009. (CONFIDENTIAL FR) June 4, 1971 MONETARY AGGREGATES AND MONEY MARKET CONDITIONS Prepared for the Federal Open Market Committee By the Staff BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM June June 4, 4, 1971 1971 (FR) CONFIDENTIAL MONETARY AGGREGATES AND MONEY MARKET CONDITIONS Recent Developments (1) In May all of the key monetary aggregates substantially exceeded the paths acceptable to the Committee at the last meeting. Growth in the narrowly defined money supply accelerated to an annual rate estimated on a preliminary basis, at around 17 per cent. If this preliminary estimate holds up, it will be the largest increase for any month in the 25 year history of the daily average series. The annual growth rate of the adjusted credit proxy remained relatively moderate--at only about half that for M 1 --although it exceeded the expected rate by about the same number of percentage points as M 1 . RECENT GROWTH RATES IN KEY MONETARY AGGREGATES (Per cent annual rates of change) April Actual May Bluebook Path 1/ Actual M1 9.8 8.5 17.0 M2 12.6 8.5 15.0 5.3 0.0 8.5 Adjusted Proxy 1/ Data for last five days of May are still estimated on basis of preliminary information for statement week ending June.2. (2) Shortly after the last Committee meeting, preliminary data for the statement week ending May 12 indicated that M 1 and M 2 had increased to levels well above their bluebook paths. Because this increase occurred in the week when settlement was being made on the heavy early May volume of -2dollar transfers into foreign currencies, question was raised whether it might not simply be a temporary reflection of such transfers. However, disaggregated final data for the week indicated that the increase was not concentrated at the money centers through which the bulk of foreign exchange transactions probably occurred. Moreover, since the week of the 12th,the level of the money stock has continued to run well above the bluebook path. The reasons for the extraordinary recent strength of money supply are unclear, but they may reflect a lagged response to the marked reductions of interest rates in earlier months, a more rapid growth of money GNP thus far in 1971, and perhaps a precautionary build-up in cash balances by consumers and others in an uncertain economic atmosphere. RECENT PATHS OF KEY MONETARY AGGREGATES (Seasonally adjusted, billions of dollars) M2 B,luebook Path Actuals Bluebook Path Actuals Adjusted Credit Proxy Bluebook Path Actuals Month April May 221.4 223.0 221.2r 224.3 442.3 445.5 442.2r 447.7 341.8 341.8 341.7r 344.1 Week ending April 28 5 May 12 19 26 June 2p 219.6 221.2 222.1 224.4 224.1 222.5 219.2r 220.8 223.3 224.9 225.7 225.7 441.2 443.6 444.5 446.8 446.8 445.8 440.5 443.1 446.3 448.2 449.7 450.7 340.2 342.3 343.0 342.1 340.3 341.0 339.8r 341.6 343.7 343.6 344.7 346.7 r = revised after last meeting. p = preliminary esstimate. (3) At the time of the last Committee meeting, bond yields were advancing sharply further in the aftermath of the international currency crisis. With the Federal funds rate remaining around the 4-1/2 per cent -3level to which it had risen in early May, this tendency persisted immediately following the Committee meeting, adding another 1/8 to 3/8 of a percentage point to the overall yield advance and perhaps contributing to further stock price declines. By the third week of May, however, bond markets began to rally and stock prices turned upward. Most recently key bond yields in all market sectors have dropped a little below the levels prevailing at the time of the last meeting. During the period when yields were still under upward pressure, the Desk purchased about $130 million of Treasury coupon issues on small orders placed directly through dealers rather than through a general go-around. (4) During the period immediately following the May 11 meeting, in view of the general weakness of bond markets and with the Treasury financing still a factor, the Desk continued to aim at a Federal funds rate around 4-1/2 that the aggregates were exceeding per cent even after new data indicated/the paths specified at the May 11 meeting. On May 20, when the securities markets rally began and new evidence indicated that the aggregates were even stronger than thought earlier, the Desk aimed at a funds rate in the 4-1/2--4-3/4 per cent range. On May 26 the funds rate target was raised again to around 4-3/4 per cent, and a week later to around 4-7/8 per cent. In terms of weekly averages, the funds rate was 4.55 per cent in the first statement week following the last meeting, and 4.68 and 4.82 per cent respectively in the two succeeding weeks. (5) In maintaining a higher average rate on federal funds, the Desk provided non-borrowed reserves somewhat less liberally than otherwise. This has been reflected in the marginal reserve measures. Over the three full statement weeks since the last meeting, net borrowed reserves averaged -4about $215 million in contrast to average free reserves of $70 million over the three preceding statement weeks. Similarly, in the most recent three weeks, member bank borrowings at the Federal Reserve averaged a little over $400 million, nearly double the average for the preceding period. (6) The general firming of day-to-day money market conditions in May was reflected--with some lag--in further marked advances of other short-term interest rates. The rate on 3-month Treasury bills, for example, moved from a level around 3.85 per cent at the time of the last meeting to a recent high of 4.45 per cent, while advances of other short-term rates ranged generally from 1/4 to 5/8 of a percentage point. During late May and early June when the bond market was rallying, bill rates also declined somewhat as they often do at this time of the year. But most recently, the 3-month Treasury bill has edged up to around 4.30 per cent. (7) The table on the next page summarizes seasonally adjusted annual ratesof change in major financial aggregates for selected periods. Fourth Quarter (Dec. over Sept.) First Quarter (March over Dec.) 4th and Ist Qtrs4 C~tabined (March over Sept.) Latest Two Months (May over March) Total Reserves 6.6 11.0 8.9 9.9 Nonborrowed Reserves 9.4 11.0 10.3 11.1 6.2 13.4 Concepts of Money Ml (Currency plus demand deposits 1/) 3.4 M2 (Ml plus time deposits at commercial banks other than large CD's) 9.2 17.8 13.7 13.8 M 3 (M2 plus deposits at thrift institutions) 9.7 19.0 14.6 16.2 8.3 10.9 9.7 6.9 6.1 13.8 10.0 5.2 $ 0.1 Bank Credit Total member bank deposits (Bank credit proxy adj.) Loans and investments of commercial banks 2/ Short-term market paper (actual $ change in billions) Large CD's $ 4.3 $ 1.8 $ 6.1 Bank-related commercial paper N.S.A. - 2.3 - 0.7 - 2.9 - 1.9 - 0.4 Nonbank commercial paper 1.5 3/ .3/ - 0.1- Other than interbank and U.S. Government. Based on month-end figures. Includes loans sold to affiliates and branches. April 1971 over March 1971 N.S.A. NOTE: Not seasonally adjusted. All items are based on averages of daily figures, except for data on total loans and investments of commercial banks, commercial paper and thrift institutions--which are either end-of-month or last Wednesday of month figures. Prospective developments (8) The continued strengthening of the aggregates has led the staff to raise its estimates of both the levels of and growth rates in money supply and bank credit that might be expected in the near term at any given level of interest rates. In view of recent developments the 8-1/2 per cent growth rate in M1 for the second quarter acceptable to the Committee at the last meeting appears practically impossible to achieve (except for accidental developments or substantial projection misses not related to deliberate policy operations). Moreover, the average 8 per cent growth rate over both the second and third quarters together--which represented the intermediate path acceptable to the Committee last time-would also be very difficult to attain. At the present time, such a path would require a very sharp drop to around 4 per cent annual rate in quarter growth in M1 . This would appear to entail a considerable wrench- ing of the money market, with a near-term rise in large as seriously to upset capital markets, the Federal funds rate so possibly followed later in the summer or early fall by the need to induce a sharp drop in rate in third the funds order to keep M1 growth from falling below even a 4 per cent rate over the fourth quarter. Though not as magnified, similar control problems could develop in moving onto other less restrictive paths--for instance, the alternative C path presented for consideration at this time. (9) Three alternative paths for the various aggregates are shown in the detailed table on page 7. The text table on page 8 summarizes staff estimates of the relation between money market conditions and the three Alternative Monthly and Quarterly Paths of Key Monetary Aggregates (Seasonally adjusted, billions of dollars) Alt. A Alt. 226.1 229.0 230.7 231.9 226.1 228.8 230.4 231.4 B Alt. C Alt. A Alt. 226.0 228.5 229,8 230.5 452.5 457.5 461.2 464.0 452.4 456.9 460.3 462.7 B Alt. C 1971 June July August September 452.3 456.2 458.8 460.7 Per Cent Annual Rates of Growth June July August September 9.5 15.5 9.0 6.0 9.5 14.5 8.5 5.0 9.0 13.5 7.0 3.5 12.5 13.5 9.5 7.5 12.5 12.0 9.0 6.5 12.0 10.5 7.0 5.0 2nd Q. 1971 3rd Q. 1971 12.0 10.5 12.0 9.5 12.0 8.0 13.5 10.0 13.5 9.0 13.5 7.5 Total Reserves Adjusted Credit Proxy Alt. A Alt. 346.9 349.4 353.5 355.5 346.7 349.0 352.8 354.7 B Alt. C Alt. A Alt. B Alt. 1971 June July August September 346.7 348.5 351.8 353.5 31.6 31.9 32.3 32.5 31.6 31.9 32.3 32.4 31.6 31.8 32.2 32.3 Per Cent Annual Rates of Growth June July August September 10.0 8.5 14.0 7.0 9.0 8.0 13.0 6.5 9.0 6.0 11.5 6.0 11.5 13.0 17.0 4.5 11.5 11.5 16.0 3.5 11.5 10.0 14.5 2.5 2nd Q. 1971 3rd Q. 1971 8.0 10.0 7.5 9.0 7.5 8.0 10.5 11.5 10.5 10.5 10.5 9.0 C alternative paths for the aggregates. Monthly, as well as quarterly, rates of growth are shown in this summary table for M 1 (taken to represent the collection of aggregates) to highlight the sharply diminished rates of growth that might be expected by late summer, particularly if money market conditions are to be tightened significantly further. tion of money market conditions, it In specifying the constella- should be pointed out that as the Federal funds rate moves above the discount rate, bank attitudes toward use of the discount window will change, with consequent uncertainties in estimating the expected level of member bank borrowings during such a transition period. Alternative B Alternative A Federal funds rate Member bank borrowings Alternative C 6 5-1/4 4-3/4 350 - 450 250 - 350 450 - 600 Growth in M1: Monthly June July 9.5 15.5 9.5 14.5 9.0 13.5 9.0 6.0 8.5 5.0 7.0 3.5 Quarterly 2nd quarter 12.0 12.0 12.0 3rd quarter 10.5 9.5 8.0 August September (10) Given a Federal funds rate of around 4-3/4 per cent, M1 growth in June would be expected at about a 9-10 per cent annual rate, and for the second quarter as a whole it would be around 12 per cent. The third quarter rate of growth would be projected to slow only modestly to around 10-1/2 per cent. But by late in that quarter and in the fall a substantially slower growth rate would be expected, as the lagged effect on the demand for money of the higher short-term interest rates that will have prevailed since mid-March begins to take hold. -9(11) A tightening of the money market between now and mid-year to the degrees indicated by the suggested specifications for alternatives B and C would have little effect on growth in M1 during June, but would begin to have more noticeable effects in ensuing months.1 / M 1 growth rate in the Under alternative B the third quarter would be expected to be reduced to 9-1/2 per cent and under alternative C to 8 per cent. However, by late summer or early fall, it is our best estimate that the growth rate would be sharply reduced, perhaps in alternative C to only about a 3--4 per cent annual rate, although there are great difficulties of course in pinpointing exact months in which low growth rates would be likely to emerge. Growth at such low rates would continue for some months as sharply higher short-term interest rates gradually reduce the demand for money balances and as higher long-term interest rates over the next few months and possibly weakness in the stock market depress individuals' net worth (which also reduces money demand). Thus, during fall the money supply could be growing considerably less than might be desired unless interest rates were moved sharply downward in the interim. (12) Alternative B, which indicates a somewhat more gradual deceleration of the aggregates than alternative C, is less likely to lead to sharp and sustained upward interest rate adjustments and hence to the need for a later easing in money market conditions. However, over the near- term a funds rate around 5-1/4 per cent, as specified in alternative B, would likely induce a renewed increase in long-term interest rates, particularly as expectations of a discount rate increase became more prevalent and another rise in the prime rate more likely. But the general interest rate increase would not carry as far as under alternative C and there would be a greater probability of a corrective market rally later on. 1/ Weekly patterns for the aggregates between now and the next Committee meeting are appended. Because changes in money market conditions affect aggregates with a lag, differences among the alternatives for the weeks immediately ahead are, of course, quite small. -10(13) Under all three alternatives, growth in M2 is expected to slow more than growth in M1 between the second and third quarters. Time and savings deposits other than large CD's are growing less rapidly in the second than the first quarter, although the slowing thus far has been less than anticipated. We expect a further slowing in the third quarter as consumer spending strengthens and as short-term interest rates rise--with the slowing in such deposit inflows becoming more pronounced to the extent the money market tightens. Under alternative A, we would expect the 3-month bill rate between now and mid-year to be in a 4-1/4--4-3/4 per cent range, and it may be expected to rise somewhat above that range in the summer as the Treasury finances large and partly seasonal cash needs. Under alternative B, the 3-month bill would be likely to move into a 4-5/8--5-1/4 per cent range by or shortly after mid-year; and the rate would likely be substantially higher under alternative C. (14) Loan demands on banks over the summer months are expected to be fairly strong as economic recovery proceeds and as some borrowers switch from the open market to banks. And growth in the adjusted credit proxy may be somewhat greater in June and the third quarter than in April-May, although it is in general expected to continue on the moderate side. Instead of declining, nondeposit sources of funds are projected to show little net change from their recently prevailing minimal levels; thus, they would no longer be a negative factor affecting bank credit. Outstanding large CD's are expected to show little net change from current levels under alternative A, given the relatively comfortable liquidity position of banks. But with tighter money market conditions--as under alternatives B and C--a moderate net growth in CD's might develop as banks attempt to compensate in part for slower growth in other time and demand deposits. In addition, under tighter reserve conditions, banks would become less willing purchasers of securities. -11- Possible directive language (15) This section presents possible language for the second paragraph of the directive corresponding to the three alternative policy courses discussed above. In all three alternatives it is proposed to delete the reference not only to the now-completed Treasury financing, but also to uncertainties in foreign exchange markets. uncertainties do, continue, of course, Although such the likelihood that exchange market developments may pose significant problems for domestic financial markets in the near-term now seems considerably less than it did at the height of the tensions in early May. (16) possible use if Alternative A. The following language is proposed for the Committee decides to call for maintenance of prevail- ing money market conditions, subject to a proviso clause. "To implement this policy,[DEL: to seeks committee the moderate over aggregates credit and monetary in growth Treasury current of account taking ahead, months the uncertainand markets, capital in developments financing, markets.] exchange foreign in ties System open market operations until the next meeting of the Committee shall aimed at] initially be CONDUCTED WITH A VIEW TO[DEL: maintaining thereafter and currently] prevailing money market conditions; [DEL: [DEL: money and reserves bank maintaining to aview with conducted objectives.] cited above the with consistent conditions market PROVIDED THAT SOMEWHAT FIRMER CONDITIONS SHALL BE SOUGHT IF IT APPEARS THAT THE MONETARY AND CREDIT AGGREGATES ARE SIGNIFICANTLY EXCEEDING THE GROWTH PATHS EXPECTED AND IF CAPITAL MARKETS ARE NOT UNDER EXCESSIVE PRESSURE." -12If the Committee adopts this alternative, it may wish to consider the money market conditions noted for alternative A in paragraph (9) as a description of "prevailing" conditions, and for purposes of the proviso clause to adopt the aggregate growth paths discussed earlier in connection with alternative A as the "expected" paths. The proviso clause has been formulated in one-way terms, guarding against significant excesses but not shortfalls, on the assumption that the Committee would not want money market conditions to be eased in the coming period if the aggregates should fall short of the indicated paths. As will be noted, the proposed proviso retains the sense of the reference to capital market developments in the present directive (i.e., to take account of such developments in any firming operations) by indicating that somewhat firmer conditions are to be sought under the proviso only "if capital markets are not under excessive pressure." (17) Alternative B. This language is proposed for possible use if the Committee decides (a) to formulate its primary instruction in terms of desired growth rates for the monetary and credit aggregates (subject to any constraints that might be imposed by developments in capital markets), and (b) to adopt as targets for the time being the growth rates discussed earlier in connection with alternative B. "To implement this policy, the Committee seeks to moderate growth in monetary [DEL: months the over aggregates credit] and financing,] Treasury current the ahead, taking account of [DEL: foreign in uncertainities and , developments in capital markets [DEL: exchange markets]. System open market operations until the at] initially aimed next meeting of the Committee shall be [DEL: -13[DEL: conditions, market money prevailing currently maintianing thereafter] and conducted with a view to maintaining bank reserves and money market conditions consistent with the cited] above [DEL: THOSE objectives." It is proposed to use the phrase "to moderate growth in monetary aggregates in the months ahead" as a summary description of the objective for the aggregates, deleting the words "and credit", on the assumption that the Committee will not view recent rates of growth in the adjusted proxy as so large as to require moderation. (18) Alternative C. This language is proposed for possible use if the Committee decides to adopt as targets the growth rates discussed earlier in connection with alternative C, and to instruct the Desk to move to the money market conditions noted in paragraph (9) in connection with that alternative. to seeks Committee the "To implement this policy, [DEL: moderate over aggregate credit and monetary in growth Treasury current of account taking ahead, months the financing, uncerand markets, capital in developments markets.] exchange foreign in tainties System open market operations until the next meeting of the Committee shall be [DEL: prevailing currently maintaining at initially aimed money thereafter] and conditions, market conducted with a maintaining] bank reserves and view to MOVING ACTIVELY TO [DEL: cited above the with consistent money market conditions[DEL: objectives] THAT WILL LEAD TO A SUBSTANTIAL MODERATION OF GROWTH IN MONETARY AGGREGATES OVER THE MONTHS AHEAD." -14This language has been formulated in a manner which the staff believes would underscore the Committee's determination to slow the growth rates in the aggregates. -15Alternative Weekly Paths of Key Monetary Aggregates (Seasonally adjusted, billions of dollars) M 1 Alt. A Alt. 225.7 225.7 224.3 226.1 227.6 226.4 225.7 225.7 224.3 226.1 227.6 226.3 2 B Alt. C Alt. A Alt. 449.7 450.7 449.8 452.2 454.8 453.6 449.7 450.7 449.8 452.2 454.7 453.2 B Alt. C 1971 May June 26 2 9 16 23 30 225.7 225.7 224.3 226.1 227.5 226.1 Adjusted Credit Proxy Alt. A Alt. 344.7 346.7 346.6 347.2 347.2 346.0 344.7 346.7 346.6 347.2 347.0 345.6 B Alt. 449.7 450.7 449.8 452.2 454.5 452.9 Total Reserves C Alt. A Alt. B Alt. C 1971 May June 26 2 9 16 23 30 344.7 346.7 346.6 347.2 347.0 345.5 31.4 31.5 31.6 31.7 31.3 31.6 31.4 31.5 31.6 31.7 31.3 31.6 31.4 31.5 31.6 31.7 31.3 31.6 CHART 1 STRICTY CONFIDENTIAL (FR) 6/4/71 MONETARY AGGREGATES NARROW MONEY SUPPLY M1 (6/2/71), BILLIONS OF DOLLARS 230 -220 210 8.5% PATH I I I I BROADER MONEY SUPPLY M 6/2/71) PATH .1 1969 - Actual Currentiv Pfoected 1970 1971 --- Wk y Path, ndhcated at FOMC Meeting (5/11/71) F -, 1 M A '71 ..- M J Longer Run Path CHART 1A STRICTLY CONFIENTIAL (FR) 6/4/71 MONETARY AGGREGATES ADJUSTED CREDIT PROXY BILLIONS OF DOLLARS 340 330 320 4.5% PATH 310 300 RESERVES 1 32 (6/2/71) 31 I/ 30 5.0% PATH 31 29 S30 I 1969 - Actual -- Cirrntiv Pro4ected 1970 1971 --- Wkly Path, Indicated at FOMC Meetmng 5/il/7 I F I I I M A '71 ..- M J Longer Run 'Path CHART 2 6/4/71 INTEREST BEARING SOURCES OF BANK FUNDS BILLIONS OF DOLLARS IME AND TIME AND SAVINGS DEPOSITS OTHER THAN CD'S NONOEPOSIT SOURCES 1970 1971 CHART 3 MONEY MARKET CONDITIONS AND INTEREST RATES MONEY MARKET CONDITIONS INTEREST RATE Short-term PER CENT INTEREST RATES Long-term PER CENT WEEKLY -110 NEW CORPORATE Aaa WEDNESDAY MORTGAGES MFHA FNMA MONDAY I AUCTION R SCOUNT RATE F R DISCOUNT RATE FEDERAL FUNDS RATE I' GOVERNMENT BI RESERVES 20 YEAR AVERAGES BILLIONS OF DOLLARS 17 12 BORROWED 1-1 197 k\_lPNET 0 BORROWED 1970 1971 1970 1971 1970 1971 -- 9 STRICTLY CONFIDENTIAL (FR) Table 1 PATHS OF KEY MONETARY AGGREGATES - -r -- - --~--- Narrow Money Supply (M1) 1/ Period 1 Path as of May 11 2 ~ ------ -- - I L June 1 4. 1971 Total Reserves Actuals & Current Prol. sof .1 Actuals& Current Prol Monthly Pattern in Billions of Dollars 1971: Mar. Apr May June 223.0 224.1 221.2 224.3 (226.1) 445.5 447.9 442.2 447.7 (452.5) 30.2 30.5 30.7 334.1 337.7 340.2 423.0 430.8 437.6 214.8 217.3 219.4 Jan Feb. 341.8 344.1 341.7 344.1 (346.9) 30.8 31.3 31.1 31.3 (31.6) Annual Percentage Rates of Change-Quarterly and Monthly 1970- 1st 2nd 3rd 4th 1971- 1st ( 2nd ( 1971- 8.5 7 14 21 28 May 5 12 19 26 ______________ NOTES 8.5 6 0 Apr. June 9.5 1.1 14.0 11.6 Jan. Feb. Mar. Apr. May JunP 1971: 8.9 (12.0) 2 pe 9 9.8 16.8 ( 9.5) 8.5 6.5 Weekly Pattern in Billions of Dollars 223.1 222.6 220.4 219.2 17.8 (13.5) -2.9 2.6 19.1 6.6 0.5 6.5 17.2 8.3 3.4 8.4 11.0 9.2 5.9 5.8 6.1 3.4 ( ( ( ( 4.5 10.9 (8,0) 11.5 22.1 18.9 10.5 12.9 8.9 12.6 14.9 (13.0) 5.3 8.4 (10.0) 8.0 5.0 12.2 11.4 9.2 18.5 -6.0 2.7 17.1 (11.5) 30.5 30.7 30.7 31.2 341.6 343.0 342.7 339.8 443.6 443.2 441.2 440.5 11,0 (9.5) 343.6 344.7 31.4 31.0 31.4 31.3 31.5 30.9 31.2 31.4 346.7 (346.6) 31.2 30.8 31.5 (31.6) 221.2 222.1 224.4 224.1 220,8 223.3 224.9 225.7 443.6 444.5 446.8 446.8 443.1 446.3 448.2 449.7 342,3 343.0 342.1 340.3 341.6 222.5 222.8 225.7 (224.3) 445.8 446.1 450.7 ( 449.8) 341.0 345.4 343.7 I Annual rates of change other than those for the past are rounded to the nearest half per cent. Data shown in parenthesis are current projections. 1/ Currency plus private demand deposits. 2/ M1 plus time deposits other than large CD's. pe - Partially estimated. FR712-D Rev 2/16/71 STRICTLY CONFIDENTIAL (FR) Table 1-A June 4, 1971 PATHS OF KEY MONETARY AGGREGATES U.S Gov't. Deposits Perod Pathasof May 11 Actuals & Current Prol Total Time & Savings Deposits Path as of 4 Actuals & May 11 Time Deposits other than large CD' 5Path asof Current Prol May 11 Large Negotiable CDs Actuals & Path as of 8Actuals & Current Prol ay 11 Current Prol Nondeposit Sources of Funds Path as of May 11 1Actuals & Current Prol Monthly Pattern in Billions of Dollars 1971: 235.3 240.9 246.1 Jan. Feb. Mar. Apr. May Tune 250.4 251.8 248.3 251.4 (254.6) 222.5 223.8 208.2 213.5 218.3 27.1 27.4 27.8 10.1 8.6 7.0 221.0 223.5 (226.4) 27.3 27.9 (28.2) 5.1 4.1 (3.9) Annual Percentage Rates of Change--Quarterly and Monthly 1970: lqt ( 2nd ( 3rd 4th 1971: 1st ( 1.4 14.1 32.2 21.8 9.5 2nd( 1971: 27.3 (14.0) 0.9 11.3 16.5 15.4 27.2 (15.0) 10.0 22.3 30.5 27.0 25.5 28.6 25.9 Jan. Feb. Mar. Apr. May June 10.0 6.5 10.7 15.0 (15.5) 14.8 13.6 (15.5) 8.5 7.0 Weekly Pattern in Billions of Dollars 1971: Apr. 7 14 21 28 3.3 5.3 7.9 5.4 May 5 12 19 26 4.8 5.1 3.3 3.0 250.1 250.2 250.2 250.6 249.9 250.6 251.1 252.2 4.8 (4.9) 251.2 251.1 253.2 (253.7) 2 pe 9 June ___________ NOTES: 220.5 220.6 220.8 221. 3 27.4 27.5 27.0 27.4 5.9 5.1 4.8 4.6 222.4 222.4 222.4 222.7 222.3 223.0 223.3 224.0 27.6 27.6 27.9 28.2 223.3 223.3 225.0 (225.5) 28.2 (28.2) 4.5 4.2 4.0 3.8 4.1 (4.0) 247.9 248.1 247.9 248.7 a________ _______ aL_______ .a Annual rates of change other than those for the past are rounded to the nearest half per cent. Data shown in parenthesis are current projections. pe - Partially estimated. 1 FR 712-K Rev2/16/71 CONFIDENTIAL(FR) Table 2 June AGGREGATE RESERVES AND MONETARY VARIABLES 1 Period Reserve Aggregates1 2 Total Reserves RETROSPECTIVE CHANGES, SEASONALLY ADJUSTED (Annual rates in percent) Monetary Variables Total 4 Money Supply 3 Member Bank Nonborrowed Reserves Adjusted 5 Credit Proxy 6 Total 1968 1969 1970 + 7.8 - 1.6 + 6.4 + 6.0 - 3.0 + 9.0 + 9.5 +11.8 Sethi-annuallv 1st Half 1969 2nd Half 1969 + 0.7 - - - 3.9 1st Half 1970 2nd Half 1970 +13.0 Quarterly 1st Qtr. 1970 2nd Qtr. 1970 3rd Qtr. 1970 4th Qrr. 1970 + 2.6 +19.1 + 6.6 1st Qtr. 1971 +11.0 - 0.2 - 2.9 3.7 2.4 + 7.8 n.a. n.a. 4.0 4- + 8.3 3.5 4.6 - 7 3.1 + 5.4 Private Demand Deposits + 7.4 + 6.0 + 6.3 + 7.9 + 2.4 + 5.1 9 Deposits Adlusted Ist. Deposits 10 Comnbaal Paper +11. 1 + 6.3 + 3.4 + 7.8 n.a. n.a. 4-7.3 +28.3 - 5.0 +18.4 n.a. + 5.1 1.2 + 1.2 + 6.5 + 5.4 + 4.7 + 0.1 - 3.5 - 6.6 + 5.3 4 1.6 n.a. + 1.9 +17.1 + 3.3 +20.0 + 3.5 412.9 + 5.9 + 4.8 + 7.8 + 4.6 + 5.3 + 4.7 + 7.8 +27.9 + 4.7 +10.6 +12.8 + 1.7 - 0.4 + 4.1 +24.4 + 9.4 + 0.6 + 6.0 +24.1 +15.1 + 0.5 + 6.5 +17.2 + 8.3 + + + + + + + + + + + + + 1.4 +14.1 +32.2 + 21.8 + 2.5 + 7.0 + 9.3 +11.6 +17.8 1-7.5 -16.2 +20.4 +11.0 +17.0 +10.9 + 8.9 + 9.0 + 8.9 +27.3 +23.3 -24 + 0.8 4 0.6 + 2.6 + 0.8 + 3.7 + 1.3 +27.4 - 3.5 5.5 + 9.4 + 5.2 + 5.2 + 7.8 + 9.9 - 8.0 - - + 1.2 +11.2 + 3.1 + 6.7 +12.6 +26.2 -13.8 +10.5 + 3.0 + 2.2 +19.7 +10.9 +11.4 + 8.1 + 5.3 + 7.3 +34.4 +18.9 -30.0 + 4.4 + 8.9 + 6.6 +35.6 +28.8 +29.8 +11.9 + 5.9 +10.0 -87.5 +49.6 - 5.9 5.8 6.1 3.4 6.1 9.4 3.3 5.8 5.3 5.3 6.7 2.7 7 1969: Dec. +6 1970: Jan. Feb. Mar. + 3.1 -12.0 + 72 -15.6 +75 +14.0 +10.7 +12.3 Apr. May June +21.3 -13.9 4 0.5 +25 4 -19.0 + 6.2 +16.8 +13.7 +10.3 + 5.8 + 7.0 + 9.9 + 5.2 + 2.3 July Aug. Sept. + 6.0 +23.3 +?7.5 -16.1 448.8 +40.1 +22.7 +29.2 +19.0 +18.1 +23.2 + 9.7 + 5.7 + 6.8 + 5.7 + 7.5 + 2.5 Oct. Nov. Dec. - 1.9 + 3.6 +18.4 + 4.4 +22.8 +10.1 +13.1 +21.4 + 1.1 + 7.0 +16.5 + 1.1 + 2.8 + 6.2 + 7.5 + 4.9 + 4.9 + 2.2 + 6.6 +20.3 +15.1 +28.8 -10.6 + 9.4 +14.5 +32.4 -28.7 +58.1 Jan. Feb. Mar. Apr. +12.2 +11.4 + 9.2 + 2. 7 + 8.8 +15.1 + 8.8 + 97 +16.1 +19.3 +14.9 +12.2 +10.5 +12.9 + 8.9 + 1.1 + 7.4 + 9.8 + 9.7 +12.0 - 1.4 +16.0 +12.2 + 9.2 +25.5 +28.6 +25.9 +10.7 +25.1 +18.5 +24.9 +21. 7 - 9.0 1971: _ NOTE: _I _ 1 - _Addenda 8 Currency _Deposits 4, 1971 __ +12 1 - 4.2 8.0 - 4.5 g - F I - 1.2 4.1 + 2.5 +11.6 + 9.8 5.3 I +12.9 +15.3 +14.0 I 6.8 L 0.7 2.5 - 7.2 -10.9 -55.2 + 4.4 I FR712-E deposits, but reserve requirements Aggregate reserve series have been adjusted to eliminate changes in percentage reserve requirements against on Eurodollar borrowings are included beginning October 16, 1969, and requirements on bank-related cosnaercial paper are included beginning October 1, 1970. CONFIDENTIAL (FR) Table 3 June AGGREGATE RESERVES AND MONETARY VARIABLES 4, 1971 SEASONALLY ADJUSTED 1969: Nov. Dec. 27,354 27,783 27,928 26,210 26,538 26,806 27,129 27,548 27,707 283.5 285.8 285.8 203.2 203.5 203.6 157.6 157.6 157.7 194.2 194.0 194.6 182.6 182.9 183.4 302.2 305.5 305.7 Jan. Feb. March 28,001 27,722 27,723 26,966 26,615 26,782 27,823 27,523 27,536 284.8 282.9 286.2 205.2 204.5 206.6 159.0 158.1 159.8 193.3 193.5 195.3 182.7 182.9 183.8 304.8 303.4 306.1 April May June 28,216 27,890 27,902 27,350 26,916 27,056 28,046 27,692 27,713 290.2 289.1 290.5 208.3 209.2 209.6 161.2 161.6 161.9 198.5 200.3 202.2 185.6 187.1 189.0 309.6 309.3 311.1 July Aug. Sept. 28,041 28,585 ?9,240 26,694 27,780 28,708 27,896 28,408 29,024 296.0 303.2 308.0 210.6 211.8 212.8 162.5 163.7 164.6 208.2 213.2 218.5 191.3 194.2 196.8 315.8 321.9 324.5 Oct. Nov. Dec. 29,385 29,474 29,925 28,928 29,033 29,584 29,134 29,233 29,703 310.6 314.0 319.6 213.0 213.5 214.6 164.5 164.8 165.7 222.2 225.0 230.4 199.1 201.1 204.4 324.8 326.7 331.2 Jan. Feb. March 30,229 30,515 30,748 29,801 30,176 30,398 30,029 30,255 30,534 323.9 329.1 333.2 214.8 217.3 219.4 165.5 167.7 169.4 235.3 240.9 246.1 208.2 213.5 218.3 334.1 337.7 340.2 April 30,816 30,644 30,611 336.6 221.2 170.7 248.3 221.0 341.7 7 14 21 28 30.538 30,694 30,685 31,152 30,341 30,515 30,655 30,876 30,246 30,406 30,679 30,979 335.7 337.9 337.9 335.1 223.1 222.6 220.4 219.2 172.7 172.1 169.8 168.6 247.9 248.1 247.9 248.7 220.5 220.6 220.8 221.3 341.6 343.0 342.7 339.8 5 12 19 p 26 p 31,477 30,903 31,177 31,378 31,289 30,794 30,854 31,077 31,072 30,653 31,036 31,155 337.1 339.5 339.6 340.9 220.8 223.3 224.9 225.7 170.1 172.5 174.0 174.9 249.9 250.6 251.1 252.2 222.3 223.0 223.3 224.0 341.6 343.7 343.6 344.7 Oct. 1970: 1971- Week ending: 1971--April May NOTES: Aggregate reserve series have been adjusted to eliminate changes In percentage reserve requirements against deposits, but reserve requirements on Euro-dollar borrowings are included beginning October 16, 1969, and requirements on bank-related commercial paper are included beginning October 1, 1970. Adjusted credit proxy includes mainly total member bank deposits subject to reserve requirements, bank-related commercial paper, and Eurodollar borrowings of U.S. banks. Weekly data are daily averages for statement weeks. Monthly data are daily averages except for nonbank commercial paper figures which are for last day of month. FR 712 - F Table 4 MARGINAL RESERVE MEASURES (Dollar amounts in millions, based on period averages of daily figures) Member Free reserves Period Excess reserves Total Banks Borrowings Ci Reserve Malor banks 8 N.Y. Outside N.Y. t Other Country Monthly (reserves weeks ending in): 1969--July August September October November December -1,045 997 744 995 975 849 - 266 214 282 195 238 278 1,311 1,211 1,026 1,190 1,213 1,127 89 81 83 106 120 268 250 253 236 327 387 310 364 256 222 293 250 220 608 621 485 464 456 329 1970--January February March April May June July 759 916 751 687 765 736 -1,134 169 210 129 178 159 171 183 928 1,126 880 865 924 907 1,317 148 106 90 227 165 140 218 287 317 225 331 241 289 460 232 289 287 119 228 217 348 261 414 278 188 290 261 291 August - 706 175 881 143 278 273 187 September October November December * - 374 274 199 84 235 193 210 264 609 467 409 348 101 12 42 36 115 40 17 16 274 313 294 265 119 102 57 30 - 140 71 238 264 378 335 45 29 36 30 262 248 35 29 - 120 192 312 41 17 238 16 2 9 154 221 152 212 15 77 9 36 119 61 9 38 1971--January February March April May p 1970--Nov. 4 11 18 25 - 105 163 166 360 318 282 164 76 423 445 330 436 11 69 -86 15 29 1 22 311 282 295 287 86 65 34 41 Dec. 2 9 16 23 30 - 38 154 279 114 164 417 136 120 211 434 455 290 399 325 270 86 -55 39 -- 22 -48 11 -- 300 263 268 250 245 47 27 28 25 25 1971--Jan. 6 13 20 27 138 245 380 72 545 32 92 282 407 277 472 354 71 -82 26 60 -63 20 258 249 284 266 26 28 43 42 - Feb. 3 10 7 24 - 46 42 264 67 237 205 297 317 283 247 561 250 -114 - --121 -- 253 229 280 228 30 18 46 22 Mar. 3 10 17 24 31 88 -339 25 -265 119 170 82 265 68 376 258 421 290 333 257 -108 L6 52 -- 1 51 -15 18 241 249 231 251 217 16 13 13 15 22 7 80 277 197 -- - 184 13 14 21 28 208 81 48 150 84 176 17 -42 -- - 58 3 128 1 34 127 79 86 6 4 14 5 12 19 p 26 p - 191 131 193 9L 365 230 115 175 174 99 308 269 46 39 134 91 40 20 47 36 61 2L 74 85 27 16 53 57 2 p - 54 291 645 172 157 159 157 Apr. May June _ 0 - Preimnar Prelim1Tiarv Table 5 SOURCE OF FEDERAL RESERVE CREDIT Retrospective Changes (Dollar amounts in millions of dollars, based on weekly averages of daily figures) Total Federal i Reserve credit (Excl. float) Period Year1969 (12/25/68 - 12/31/69) 1970 (12/31/69 - 12/30/70) U.S. ) +4,279 ( -+3,220 (- 143) 692 S 48 + 671 141 + 610 - 75 + 711 93 + + + 853 145 586 5 3 + 1 ( -(- 214) (+ 214) (- 150) 475 - 82 + 328 + 134 95 (+ 150) (- 244) (+ 244) ) ( (- 143) + 41 + 114 722 308 153 - 81 + + - 428 19 236 - 65 (F (+ ((+ + 109 928 + 61 - 171 +1,082 - 518 + - 26 61 333 218 (+ 74) (- 412) (+ 412) (- 367) + 106 + 209 31 + + + 279 275 761 516 502 + + + 286 414 736 432 530 + + + + 120 407 64 60 5 (+ ((+ ((+ 367) 204) 204) 107) 107) + 207 + 97 + 68 + 62 + 153 7 14 21 28 + 4+ 155 255 14a 54 + 145 - 86 + 423 43 + + + + 4 128 360 30 82) ((+ 12) (+ 70) ) (-- + 124 + 84 + 113 5 12 19 p 26 p + + + + 771 201 505 115 + + + + 712 272 304 144 + + + 384 173 400 256 ( -( -((- 2 p + 302 - 57 + Dec. 2 9 16 23 30 + + - 986 303 697 122 143 + + 1971--Jan. 6 13 20 27 + + - 938 534 64 204 + - Feb. 3 10 17 24 + - 8 236 - 3 10 17 24 May June i I/ ' + 707 +1,180 241 94 509 273 + +1,523 _---LIYLI-- Repurchase agreements Other +5,192 +4,276 4 11 18 25 Apr. Bills I/ +5,539 +3,351 1970--Nov. Mar. Government securities Total holdings + 134 + 152 + 137 97) 46) 1591 85) 13 (-- + - ) ) ) ) + + 71 56 ) ___________________ Figures in parenthesis reflect reserve effect of match sale-purchase agreement. + 206 124 Federal Agency Securities + - 67 63 Bankers' acceptances + - 35 23 . Member banks borrowings + - 24 834 Table 6 MAJOR SOURCES AND USES OF RESERVES Retrospective and Prospective Changes (Dollar amounts in millions, based on weekly averages of daily figures) a ff e c t n a su 1 of r e s e r v e s Fa c t or s Federal Reserve credit (excl. / __float) Period cold toc Currency outside banks 12/31/69 12/30/70 +5,539 +3,351 -+1,150' on e f f ect Indicates (Sign Year' 1969 (12/25/68 1970 (12/31/69 - Float operations Foreign deposits and old loans r Other nonember deposits and F.R. accounts = Change = Bank use of reserves n total reserves Requred rserves Excess reserves +1,448 +1,163 +1,340 +1,257 + 108 / - s erves -2,676 -3,122 - 813 + 773 + 241 + 667 + + 54 1 - 898 -1,655 1970--Nov. 4 11 18 25 + 4 - 692 48 671 141 ----- + - 46 353 545 298 + 146 4 81 + 88 + 153 + + 382 482 210 275 + + 24 1 17 18 - 271 86 + 16 - 397 + + + - 205 73 38 390 + + + - 78 109 156 302 + 127 36 - 118 88 Dec. 2 9 16 23 30 + + - 986 303 69 122 143 ---- + + 13 85 263 688 264 + 34 + 103 - 107 + 1 - 376 + + + 349 174 85 873 843 + + - 5 8 3 8 19 - 187 39 + 75 + 206 24 - + + + + 502 157 320 260 545 + + + + + 161 124 336 169 322 + 341 - 281 16 + 91 + 223 1971--Jan. "6 13 20 27 + + - 938 534 64 204 385 319 601 450 544 + 188 - 63 + 108 - 275 + - 250 673 191 889 + - 8 4 -- + + + + - 1 50 + 305 26 34 - + + - 768 369 787 857 + 657 + 144 + 727 -1,047 + 111 - 513 60 + + 190 Feb. 3 10 17 24 8 + -236 +1,523 -928 -- + - 3 237 587 102 + 289 -256 - 50 +418 - 402 + 542 - 533 +844 + + 16 4 10 2 - 130 7 + 97 - 515 + - 213 199 442 286 168 167 + 350 -306 + + 45 32 92 20 Mar. 3 10 17 24 31 +279 275 + 761 - 516 + 506 - + + + 220 92 635 180 435 99 - 105 + 508 - 186 60 + + - 752 185 357 304 371 + + + - 17 2 5 20 41 - 40 37 + 280 + 85 9 - + + 374 138 551 473 458 + + 227 50 368 276 150 + + 147 88 183 197 308 Apr. 7 14 21 28 + + + l 255 348 54 - + 257 483 414 580 + - 243 249 131 384 + 235 + 241 - 301 10 + + + 14 14 21 1 - 173 + 217 + 187 23 - + + 270 45 313 219 -171 24 + + 440 + 252 9 -69 - 127 33 5 12 19 p 26 p + + + + 771 201 505 115 - 171 - 229 - + + 129 351 446 58 + 307 - 248 + 83 + 218 -497 - 211 +425 -187 - 14 -13 5 + 25 - - 72 + 99 45 - 315 + + - 623 696 301 137 + 306 561 + 416 -197 + 317 - .35 - 115 + 60 Z p + 302 - 10 + 169 -300 -33 + 37 - + 116 May June - - For retrospective details, see Table 5. 1/ Included $400 million in special drawing account. 2/ p - Preliminary. -- -- 79 

Federal Reserve (1971, June 7). Bluebook. Bluebooks, Federal Reserve. https://whenthefedspeaks.com/doc/bluebook_19710608

@misc{wtfs_bluebook_19710608,
  author = {Federal Reserve},
  title = {Bluebook},
  year = {1971},
  month = {Jun},
  howpublished = {Bluebooks, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/bluebook_19710608},
  note = {Retrieved via When the Fed Speaks corpus}
}