Bluebook

Prefatory Note The attached document represents the most complete and accurate version available based on original copies culled from the files of the FOMC Secretariat at the Board of Governors of the Federal Reserve System. This electronic document was created through a comprehensive digitization process which included identifying the bestpreserved paper copies, scanning those copies, 1 and then making the scanned versions text-searchable. 2 Though a stringent quality assurance process was employed, some imperfections may remain. Please note that some material may have been redacted from this document if that material was received on a confidential basis. Redacted material is indicated by occasional gaps in the text or by gray boxes around non-text content. All redacted passages are exempt from disclosure under applicable provisions of the Freedom of Information Act. 1 In some cases, original copies needed to be photocopied before being scanned into electronic format. All scanned images were deskewed (to remove the effects of printer- and scanner-introduced tilting) and lightly cleaned (to remove dark spots caused by staple holes, hole punches, and other blemishes caused after initial printing). 2 A two-step process was used. An advanced optical character recognition computer program (OCR) first created electronic text from the document image. Where the OCR results were inconclusive, staff checked and corrected the text as necessary. Please note that the numbers and text in charts and tables were not reliably recognized by the OCR process and were not checked or corrected by staff. Content last modified 6/05/2009. (CONFIDENTIAL FR) March 15, 1974 MONETARY AGGREGATES AND MONEY MARKET CONDITIONS Prepared for the Federal Open Market Committee By the Staff BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM CONFIDENTIAL (FR) March 15, 1974 MONETARY AGGREGATES AND MONEY MARKET CONDITIONS Recent developments (1) Following the decline in January,M1 rose at a 13.4 per cent annual rate in February and has expanded considerably further in early March. M1 growth for the February-March target period thus appears to be well in excess of the Committee's specified range of tolerance. For M2, however, the expected growth rate for the February-March period remains within its range of tolerance, as inflows into time deposits other than CD's, after a large expansion in January, have been somewhat smaller than projected recently. RPD's are expected to expand at a rate slightly above 6 per cent over the two-month target period, close to the top of the range of tolerance. Growth of Monetary Aggregates and RPD's in February March Target Period Reserve and Monetary Aggregates (Growth at SAAR in per cent) Latest Estimates 6.1 RPD's 3½--6½ M1 6½--9½ 11.8 M2 9½ 11.7 Memo: Fed funds rate (per cent per annum) e- Estimate Range of Tolerance --12½ 8¼--9½ Avg. for Statement week ending 9.07 Feb. 20 9.03 March 13 Day of 9.14 March 14 9-3/8e March 15 (2) The large February increase in M1 , broadly based by region and size of bank, occurred mainly during the three weeks ending February 20 and was associated with a very sharp, $4 billion, decline in U.S. Government deposits. Changes in U.S. Government deposits often show little inverse correlation with M1 after seasonal adjustment, but the unusually large size of the change in Government deposits in the first three weeks of February may have affected the level of private deposit holdings at least temporarily. Subsequently, however, Government deposits have increased somewhat and M1 has continued to expand. (3) As shown in the table below, growth in RPD in the current February-March target period is now expected to be somewhat larger than that at the time of the previous FOMC meeting (based on the midpoint of the adopted range of tolerance). The upward revisions in the current estimate are accounted for by the larger than expected growth in private demand deposits. The other uses of RPD, in fact, are now estimated to have absorbed somewhat fewer reserves than earlier estimated. Comparison of Projected Changes in RPD's by Use February-March 1974 (In millions of dollars) Projections as of February 20, 1974 FOMC meeting Current Projection 277 334 -181 -38 Time deposits other than large CD's 134 CD's and nondeposit funds 239 143 201 Change in Total RPD's 1/ Change in Category of Use: Private demand deposits 2/ 28 85 Excess Column 1 is consistent with midChanges from January to March 1974. point of Committee's range of tolerance for RPD growth. 2/ Due to the weekly distribution of deposits and the lagged reserve requirements, the absolute change in RPD's absorbed by required reserves against demand deposits is estimated to be negative over the two months from January to March. 1/ -3(4) The Federal funds rate fluctuated around 9 per cent from the February meeting of the Committee until early March. By early March, the strong expansion in M1 and RPD would, under normal circumstances, have triggered a move to more restriction in reserve-supplying operations with the funds rate moving toward the 9½ per cent top of its range. However, by that time there already had been a broad-based increase of around 25-50 basis points in short-term market interest rates and 10-30 basis points in longterm rates. In addition, financial markets were in a sensitive state with U.S. Government security dealers and bond underwriters still holding sizable positions of longer term issues. With these considerations in mind, on March 1 the Chairman recommended and the Committee concurred that Federal funds rate be maintained at around the prevailing 9 per cent level for the time being. On March 11, with the aggregates continuing strong, the instruction to the Desk was amended by the Committee to restore the range of tolerance for the funds rate approved at the February meeting. but with the Manager expected to proceed very cautiously in moving the funds rate above the 9 per cent level. Most recently, with the aggregates still strengthening, the Manager has been operating in the expectation that the funds rate would move up to around the 9½ per cent upper limit. (5) From the mid-February Committee meeting to date, bill rates have increased by about 80 basis points, with the 3-month bill rate most recently at 7.85 per cent. by 50 to 70 basis points. For commercial paper and CD's, rates increased In the weeks preceding the mid-February meeting, short-term rates had declined by about a percentage point. The recent increases--based in part on a change in expectations about monetary policy -4and partly influenced by mid-March tax rate pressures--have retraced most of that decline. Member bank borrowing at the Federal Reserve has changed little, averaging $1,050 million over the last three weeks. (6) Yields in all sectors of the bond market have also been under upward pressure in recent weeks, as marketings of corporate, municipal, and U. S. Government issues were large. In the Treasury coupon sector, intermediate term rates increased by about 40 basis points as U. S. Government security dealers reduced by $1.3 billion their very large positions acquired in the mid-February refunding; dealer positions are now of moderate proportions. The Desk purchased $190 million of coupon issues on March 13. Treasury borrowing during the period was confined to a $1.5 billion sale of additional short tax bills in early March. only slightly further. Interest rates on mortgages have declined A continued large inflow of funds to savings and loan associations was partly used to build liquidity and to reduce borrowings. Stock market prices have shown a substantial rebound. (7) The table on the next page shows (in percentage annual rates of change) selected monetary and financial flows over various recent time periods. Appendix Table III compares money supply growth rates computed on a quarterly-average basis with those computed on a last-month-of-quarter basis. Average of Past 3 Calendar Years 1971 -1973. Past 12 Months Feb. '74 over Feb. '73 Past 6 Months Feb. '74 over Aug. '73 Past 3 Months Feb. '74 over Nov. '73 Past Month Feb. '74 over Jan. '74 Total reserves 8.5 8.0 6.5 7.1 -24.6 Nonborrowed reserves 7.6 9.7 13.1 9.8 -30.2 Reserves available to support private nonbank deposits 8.8 8.7 4.1 5.4 0.0 6.9 5.7 4.8 5.7 13.4 (M1 plus time deposits at commercial banks other than large CD's) 10.3 9.0 9.1 9.5 13.4 11.7 8.4 8.2 9.0 11.4 Total member banks deposits (bank credit proxy adj.) 10.5 9.9 4.9 6.3 0.8 Loans and investments of commercial banks 2/ 12.8 11.7 8.2 10.9 15.0 1.0 1.5 0.1 1.5 1.1 Concepts of Money M 1 (currency plus demand deposits)1/ M2 M3 (2 plus deposits at thrift institutions) Bank Credit Short-term market paper (Monthly avg. change in billions) Large CD's Nonbank commercial paper 0.1 0.8 1.4 1.3 1.4 1/ Other than interbank and U.S. Government. 2/ Based on month-end figures. Includes loans sold to affiliates and branches. NOTE: 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 derived from either end-of-month or last Wednesday-ofmonth figures. Growth rates for reserve measures in this and subsequent tables are adjusted to remove the effect of discontinuities from breaks in the series when reserve requirements are changed. Prospective developments (8) Three alternatives for Committee consideration are summarized below (with more detailed figures shown in the table on p. 6a). Alt. A Alt. B Alt. C Targets (2nd & 3rd qtrs. combined) M1 6½ 5¼ 4¼ M2 9½ 7¾ 5¾ Credit proxy 6¼ 5½ 4½ 5-7 4½-6½ Associated ranges for March - April RPD 5¾--7¾ M1 7--9 M2 Federal funds rate range (inter-meeting period) (9) 6½--8½ 6--8 8½--10½ 7¾--9¾ 7¼--9¼ 8½--9½ 9¼--10½ 9¾--11½ Following the recent overshoot in M1 growth, both alternatives B and C are designed to slow M1 growth and restore it to the 5¾ per cent growth path adopted at previous meetings. Current estimates for M1 in relation to the long-run growth path are shown in the chart on the following page. Alternative B aims at a return of M1 to the path by September, whereas alternative C moves it back more quickly by June (though it substantially below the path in the third quarter). is judged to be consistent with little then falls Alternative A, which change in money market conditions, includes a growth rate for M1 over the next six months that remains above the 5¾ per cent growth path. MONEY SUPPLY AND LONGER RUN TARGET PATH RATIO SCALE, BILLIONS OF DOLLARS -1280 Week of March 6, 1974 ®4, RATE OF GROWTH DEC. '72 TO DEC. '73 - o GROWTH GROWTH % -5 -. 5.7% S-270 I ,....lp 260 J A O S 1973 I I I I SI N J F I M A I M 1974 I J A S -6a- Alternative ____ ___Monetary Aggregates Tareets for_ Key Lonzer-Run Targets Alternative Longer-Run M1 Alt. A Alt. B Alt, C Alt. A Alt. B Alt. C Alt. A M3. Alt. B Alt. C 1973 Dec. 270.4 270.4 270.4 570.7 570.7 570.7 893.2 893.2 893.2 1974 Feb. Mar. Aor. 272.6 274.9 272.6 580.1 589.2 580.1 584.8 588.1 913.8 920.4 806.8 913.8 919.5 906.8 276.0 580.1 584.9 588.6 906.8 276.2 272.6 274.9 275.8 June 279;4 278:8 278.3 598.8 596.6 594.0 934.4 931.1 926.6 Sept. 284.0 282.3 280,9 612.8 607.9 601.5 955.0 947.8 937.4 5.1 9.2 9.0 8.8 9.2 7.6 7.2 9.1 5.7 4.7 9.9 6.8 9.3 8.7 9.3 7.5 9.0 6.4 274.9 1st Q. 2nd Q. 3rd Q. Months: Mar. Apr. 913,6 918.5 Rates of Growth Quarters: 1974 584.9 6.7 6.5 6.6 6.7 5.7 5.0 10.1 5.7 10.1 4.8 6.7 4.9 3.7 10.1 3.9 Adjusted Credit Proxy Alt. B Alt, C Alt. A 10.0 9.5 9.4 10.0 8.0 7.6 9.9 8.8 9.9 6.3. Total Reserves Alt. C Alt. B Alt. A Alt, A RPD Alt. B Alt. C 1973 Dec. 449.6 449.6 449.6 35,105 35,105 35,105 32,912 32,912 32,912 1974 Feb. Apr. 454.6 456.5 460.5 454.6 456.5 460.2 454.6 456.5 460.0 35,115 34,988 35,313 35,115 34,984 35,276 35,115 34,981 35,239 32,799 33,133 33,164 32,799 33,130 33,128 32,799 33,126 33,091 June 464.8 463.9 463.2 35,406 35,312 35,238 33,453 33,362 33,290 Sept, 470.8 468.5 466.7 35,930 35,707 35,535 34,111 33,889 33,715 6.1 7.3 5.2 6.1 6.5 4.0 6.1 5.9 2.1 4.8 5.9 2.0 3.7 4.5 1.9 2.9 3.4 6.3 3.9 7.9 6.2 2.8 6.3 5.0 5.0 9.7 5.0 9.2 -4.4 -4.5 -4.6 11.2 10.0 8.9 12.2 1.1 Mar. Quarters: 1974 1st Q. 2nd Q. 3rd Q. 3.0 Months: Mar. Apr. 10.5 12.1 -0.1 6.1 2.0 5.1 12,0 -1.3 -7(10) Effectuation of Committee policy in the weeks immediately ahead will be taking place at a time when short-term credit markets will have to absorb a large Treasury financing--one that will probably raise about $4 billion of new cash. It is likely that part of the funds will be raised through tax bills and the remainder through short-term coupon issues. This is a somewhat larger cash offering than the market is expecting, and will probably itself exert some upward pressure on interest rates. If the Federal funds rate is rising at the same time, general upward rate pressures are likely to be intensified, (11) In returning to the M1 growth path by September, alternative B includes a growth rate for M1 over the second quarter of around 5¾ per cent and during the third quarter of 5 per cent, averaging close to 5¾ per cent for the six month period. Achievement of such growth rates is expected by the staff to entail some further increase in interest rates as bank reserves are held back relative to demand. Demands for money and for supporting bank reserves over the next several months are expected to be sustained by the transactions needs associated with growth in nominal GNP projected at 5.7 and 7.8 per cent for the second and third quarters, respectively. These growth rates do not include any upward impact from lifting the embargo, and thus could underestimate money demand to some extent, particularly by the third quarter. In early spring, there is also likely to be some increase in private cash balances due to higher than average income tax refunds. In moving gradually back to the 5¾ per cent long run path, the staff would expect that reserve provision in the weeks -8ahead would lead to a rise in the Federal funds rate to around 10 per cent between now and mid-April and would be associated with M 1 growth over the March-April period in a (12) If 6 ½-- 8 ½ per cent annual rate range. such a rise in the funds rate did develop, it seems probable that there would be pronounced effects in other areas of the financial market. The 3-month bill rate would likely move up to around 8½ per cent or somewhat above, further upward. and long-term market rates would adjust Net inflows of consumer-type time and savings deposits to commercial banks might slow to around a 10 per cent annual rate, about the same as in the summer of 1973. Net inflows of deposits at thrift institutions would be expected to recede to about a 6--7 per cent annual rate, close to the amount involved in performance than in interest crediting. the summer of 1973, This would be a somewhat better and appears possible because of the large amount of interest-sensitive money already drained from these institutions and because the institutions last summer had not fully adjusted their advertising and rate policies to the new rate ceilings that became effective at the beginning of July. (13) Under alternative C, the expected rise of interest rates would be much sharper--with the funds rate moving up into the 10¼--11 per cent area--in order to bring the money supply back to the long run path by mid-year. If interest rates rose so sharply, though, a strong effect on money demand would be likely by the third quarter, with money growth in that quarter projected to fell below a 4 per cent annual rate (unless reserves were provided at a rate that would permit money market conditions to ease sharply by around mid-year). A rise in the funds rate to as high as 11 per cent range would also threaten replication of the conditions of last summer at thrift institutions. The mortgage commitment policies of those institutions would again be under considerable restraint and the viability of the current time and savings deposit ceiling rate structure would probably come into question if high interest rate levels- with the 3-month bill rate moving over 9 per cent--were sustained for some time. There could well be significant feedback effects on GNP of such developments by late summer, though more particularly by the fourth quarter. (14) Under alternative A--which encompasses a 6½ per cent growth rate for M1 over the next six months--the staff would expect that the Federal funds rate would not rise from current levels and might, over time, drop back somewhat. If the funds rate remains around 9¼--9½ per cent, there may be some further upward rate adjustments in markets, particularly as the forthcoming Treasury financing is absorbed. A somewhat lower funds rate would moderate and, perhaps to some degree reverse, recent upward rate pressures. Short-term rates, particularly bill rates, are likely to be influenced by the strength of business loan demands and by the way in which the recycling of oil money affects U.S. markets. Assuming business loan growth is moderate, banks, under this alternative, would probably not be a source of pressure on markets in view of the continued availability of demand deposits and strong growth in time and savings deposits other than large CD's. Under the circumstances, banks would have little interest in issuing additional CD's or in borrowing from the Euro-dollar market, unless rates in that market were to drop sharply with the receipt of Arab oil money in volume. -10(15) In long-term credit markets, corporate and municipal bond volume is likely to remain large over the next few months, based on the current schedule of offerings. Foreign borrowing in the U.S. capital market remains quite modest thus far, although it could pick up as borrowers become more familiar with opportunities in the U.S. market. Some further upward yield adjustments in bond markets might develop under current money market conditions, while yield adjustments are likely to be considerable under alternative B and very marked under alternative C. Further increases in bond yields, as well as a rise of short-term interest rates, would also be reflected in a tightening of mortgage market conditions. -11Proposed directive language (16) Presented below are three alternative formulations for the operational paragraph of the directive, which are intended to correspond to the similarly lettered policy alternatives discussed in the preceding section. As will be noted, alternatives A and C refer to growth rates in the aggregates "over the past 3 months." February, these are as follows: M1, For the 3 months through 5.7 per cent; M2, 9.5 per cent; and the bank credit proxy, 6.3 per cent. (17) Alternatives B and C include a reference to the prospective Treasury financing to be announced early in the week of the FOMC meeting. noted in paragraph ([13]), As this financing will be in the short-term area, so that there would ordinarily be little, if any, even-keel constraint. The reference is added parenthetically to the alternatives which contemplate a further tightening of money market conditions in view of the highly sensitive state of financial markets. Alternative A To implement this policy, while taking account of international and domestic financial market developments, the Committee seeks to achieve bank reserve and money market conditions consistent with [DEL: moderate] MODERATELY GREATER growth in monetary aggregates over the months ahead THAN HAS OCCURRED OVER THE PAST 3 MONTHS. Alternative B To implement this policy, while taking account of international end domestic financial market developments (INCLUDING THE PROSPECTIVE TREASURY FINANCING), the Committee seeks to achieve bank reserve and money market conditions consistent with moderate growth in monetary aggregates over the months ahead. -12- Alternative C To implement this policy, while taking account of international and domestic financial market developments (INCLUDING THE PROSPECTIVE TREASURY FINANCING), the Committee seeks to achieve moderate] bank reserve and money market conditions consistent with [DEL: SOMEWHAT LESS growth in monetary aggregates over the months ahead THAN HAS OCCURRED OVER THE PAST 3 MONTHS. STRICTLY CONFIDENTIAL (FR) 3/15/74 CHART 1 RESERVES AVAILABLE TO SUPPORT PRIVATE NONBANK DEPOSITS REVISED SERIES BILLIONS OF DOLLARS -140 r 6%2% growth for Feb I f ii i M ii Ii J 1973 S D i Iii M J 1974 i i S * Break in Series Actual Level of RPD After Changes in Reserve Requirements D J -1 1 I I 0 N 1973 F 1974 M CHART 2 STRCTLY CONFIOtNTIAL (FR) 3/15/74 MONETARY AGGREGATES REVISED SERIES NARROW MONEY SUPPLY M1 BILLIONS OF DOLLARS -290 -270 -250 BROADER MONEY SUPPLY M2 3/12/74) 121'% owth 'u Feb -Mar \\ -540 1973 1974 D N 79'3 J F 1974 STRICTLY CONFIDENTIAL (FR) 3/15/74 CHART 3 MONETARY AGGREGATES ADJUSTED CREDIT PROXY BILLIONS OF DOLLARS 490 470 - 450 -430 - 410 I L I _,I 1 _ i !. i. i _. i .. . IIIII II ...I RESERVES *"4 1973 * Sreak in seres, Actual Level of Total Reserves Afte, Changes in Reserve Requitements :974 -1 CHART 4 MONEY MARKET CONDITIONS AND INTEREST RATES MONEY MARKET CONDIT IONS PER CENT INTEREST RATES Short-term 12 - 10 - 8 - 8 PERCENT -1 13 WEEKLY AVERAGES INTEREST RATES Long-term r 4 RESERVES BILLIONS OF DOLLARS B ORROWED 3 NET BOROWEn . _I1 9__ I _. I _ 1973 I I I I I I I 1974 I I 1973 1974 1973 PER CENT -- 1 11 I 1974 STRICTLY CONFIDENTIAL TABLE 1 MARCH 15 BANK RESERVES (ACTUAL AND CURRENT PROJECTIONS) 1974 ----------------------------------------- r------------------------------------REQUIRED RESERVES I II aGOREGATE RESERVES I ..-......................... --......---..-.-----............... I RESERVES AVAILABLE FOR I PRIVATE NONBANK DEPOSITS I SEASONALLY ADJUSTED ----------II-----------------------------------------------------CD'S AND BOV*T AND OTHER PRIVATE NONBORROVED I II TOTAL ---------------.--------PFRIOD SEAS ADJ I NON SEAS AOJ II RESERVES RESERVES I DEMANn TIME DEP NON DEP INTERBANK ----- m - -m---m mm---------- S ----- - (1) I mm-mmmmm-m.. --------.. (2) .mm---em-m -- m--------------e--------------------------- (41) (3) (5) (6) (7) (8) II MONTHLY LEVELS-SMILLIONSI I -----------------I 1973--NOV. DEC. ( I I 32,714 32.912 I I 3?.799 32.799 MAR. I I (333331 14.2 1.4 1 I ( I I I -A.3 .4 1 1974--JAN. FERB. MAR. I 1 ( FEB.-MAR. I .9 n.0 1.2) WEEKLY LEVELS-SMILLIONS ------- 2 9 16 23 30 I I 19.976 20,227 8,430 8.460 4,069 3.918 2.142 2,193 89525 8.601 3*807 39967 3.051 2,316 35,850 359115 34.799 33*923 I I 20.309 20*039 (32.904) II 11 134,988) (33*950) 1 1 (20*267) 1 II II I I II 1 I I I I if 10.6 6.1 ( I I I 2.1) 11.3 13.4 1 1 ( 8*668) 1.4 5. I ( 4008) ( le.55) 15.7 12.7 I 5.3) I ( ( 0.) 9.8) II II II 11 II I I 1 I I 1 1I1 I II I I I II -4.3 10.5 -1.6 14.4 I -1.1 15.1 17.3 4.3 1 35.7 -24.6 ( -4.3) 45.9 -30.2 ( 1.0) ( -14.4) -6.1) ( -14.6) 35.312 35.752 369521 35,747 35,628 34.102 34*976 35.533 34,565 34.408 ( 4.6 -15,7 13.7) ( 9,2 10.7 9.3) -1.1) ( 10.1) I ----------I I 1974--JAN. 33.463 33,807 II 11 ( I 34*857 35,105 II A.3) 1 MONTHLYI 1973--NOV. DEC. 11 II 33.867 32.883 I I---I I 1974--1ST QTR. I I I 1973--3RD TR. 4TH QTR. 32,752 33,167 I 1974--JAN. FERB ANNUAL RATES OF CHANGE --------QUARTERLY I I I 32.921 32.747 33,075 32.488 32,875 I 33.562 33.482 34,563 33.749 33.860 I I II 11 II 11 11 If 1 I 1 I 1 20.361 20o423 20396 20.211 20.212 89523 8,506 8.530 8*507 8,548 3,649 3,731 3,821 39853 3*856 2.391 3*005 3,445 3#260 2*753 I I 20.031 8*578 3*906 2E559 11 35.199 34.201 3.992 2.428 34,014 19.874 8,579 II 35*167 89613 3.961 2*482 11 35.277 33.901 20.107 1,943 39992 8.626 1 20.097 34,899 33644 II 11 It 4,017 1.524 I 20351 8,647 11 34.632 33.720 32.784 MAR. 6 33.108 1,892 4,019 I 20*100 8*665 II 34,796 33.812 32,561 13 32.904 1 1 11 - - - - - - " - - -- - - -- - - -- - -- -- -- - - - --- - ------,~-------------------------------NOTEt DATA SHOWN IN PARENTHESES ARE CURRENT PROJECTIONS. AT THE FOMC MEETING OF FEBRUARY 20.1974 THE COMMITTFE AGREED ON A RPD RANGE OF 3.5 TO 6.5 PERCENT FOR THE FEB-MAR PERIOD. FEB. 6 13 20 27 1 32.641 32.739 32,795 32.956 33,165 32.873 32*812 38,737 ----------------------------------------- STRICTLY CONFIDENTIAL TABLE 2 MARCH 15, MONETARY AGGREGATES (ACTUAL AND CURRENT PROJECTIONS SEASONALLY ADJUSTED) -- ------------------------------------------------------------------------------------------------------I NONDEPOSIT .S. TIME AND SAVINGS DEPOSITS I ADJUSTED 11 I MONEY SUPPLY I SOURCES OF OTHER I I I I CREDIT II BOVT. NARROW I BROAD I CD S I FUNDS TOTAL I THAN CD S I PROXY II DEPOSITS I (MI) 1 (M2) I PERIOD I ------------------------------------------------------------------------------------------------------------------I I MONTHLY LEVELS-SBILLIONSI 7;;;:;*......*I 1973--NOV DEC I (1) 268.8 270.4 I PERCENT ANNUAL GROWTH ..................-QUARTERLY I I I I I 1973--3RD QTR. 4TH QTR 1974--1ST QTR. I SII I I I I MONTHLY ....... 1973--NOV. OFC. I I t 269,6 272.6 (274.9) I I I 566.7 5T707T I FEB.-MAR. 447.5 4496 II II II it II 11 I I I I I I (4) (5) (6) 369.9 363.1 297.8 300.3 454.3 454.6 (456.5) I1 II 11 II I II II 5.8 4.9 I I I 1 I 369.6 374.1 (375.8) 2 9 16 23 30 I ( 6.7) I 1 I 1 5,2 10.1 10.0) 10.5 3.3 I 1 6.1) 6 13 20 27 t 10.4 7.1 10.9 8.5 I I 2.7 5.6 I I -3.6 13.4 (10.1) I (11.R) II 1 II I II I ( I I 14.0 S.8 I (14.0) II II 11 11 II II I I I I 6 P 13 PEI I ------------------ ---- 1 I 62.9 62.8 304.1 307.5 (310.0) I I 7.1 7.4 I 65.5 66.6 (65.7) I I I I I I I I 7.5 7.7 ( 7.9) I I 1 I I 10.4 12.5 I (12.9) 1 p 6.3 13.4 ( 9.9) I 12.5 0.8 ( 5.0) ( 2.9) (11.7) I I 3.3 107 I I I 1 I i 21.5 14.6 ( 5. ) (10.1) I I 1 1 11.0 10 1 11 I I 15.2 13.4 ( 9.8) (11.6) I 270.3 269.5 270.0 268.9 268.4 1 1 I I 572.6 572.0 573.7 573.7 573.7 I 270.9 271,8 274.6 272.2 I MAR. ( ) I I FEB. I I 1 I I I I I 6.? 3.0 ( 3.7 MEEKLY LEVELS-MILLIONS ---------------1974-JAN. 1 I -0.2 7.5 (7) I i I 573.7 580.1 (584.9) I 1974--JAN. FEB. MAR. (3) I I I I 1974--JAN. FEB. MAR. (2) I I I 1 I I 452.5 453.1 453.5 454.5 454.0 I 577.3 579.1 582.6 581.0 I I 584.7 584.6 I I 11 II II II II 6.0 6.8 6.5 6.2 5.5 II If II I 4.5 2.5 1.5 3.1 II 458.1 455.9 II II II 1 I I I I 366.5 367.3 368.4 370.6 372.3 I I I 373.2 374.2 374.4 375.0 I 4.2 3.1 I I I I I I 302.2 302.5 303.7 304.8 305.3 I I II 455.5 454.5 453.7 454.7 I I 275.9 275.2 I I 1 1 I I ------------------------------------------------------------------------------------------------NOTEi DATA SHOWN IN PARENTHESES ARE CURRENT PROJECTIONS. I 1 I I 64.3 64.8 64.7 65.8 67.1 I I 66.8 67.0 66.4 66.2 I 308.8 309.4 1 I I 1 I I 7.0 7.1 7.3 7.7 7.8 I I 306.4 307.2 308.0 308.8 I 374.8 375.5 1 1 I 7.2 7.8 7.9 7.7 I 66.0 66.1 I 8.0 7.9 I P - PRELIMINARY PE - PARTIALLY ESTIMATED ------------------------------------------------------------------------------------------------------ 1974 STRICTLY CONFIDENTIAL (FR) MARCH 15, 1974 TABLE 3 RESERVE EFFECTS OF OPEN MARKET OPERATIONS AND OTHER RESERVE FACTORS (Millions of dollars, not seasonally adjusted) Open Market 3perations I/ Coupon Agency RP's Iasues Issuefs Net. 3/ (2) (3) (4) Bfls . Accept. (1) Total (5) Daily Average Reserve Effect 2/ Open Market Member Other / O-e-atioa Bank Borrowln. Factors (6) (7) (8) A in reserve catiories req. res. against available res 5 available IU.S.n. and interhb .f6--(7f-(8 - '1 .reaervesa, (9) (10) (11) Monthly 1973 -- Aug. Sept. Oct. Nov. Dec. 1974 -- --- -20 -30 -143 531 -915 7 -81B -583 93 -282 978 1,150 -337 -149 590 434 680 475 1,972 -1,008 1,862 -533 226 172 71 128 295 -902 -831 2,460 -1,307 1,386 1,986 394 1,336 -395 -68 -101 -678 -646 -759 379 -190 -70 534 -130 546 1,005 860 475 -397 -32 179 30 -10 74 -100 -- -328 71 1,031 9 -254 143 698 -1,505 773 -356 702 -997 895 -875 -36 -753 -494 Jan. Feb. March April Weekly 1974 -- Jan. 2 9 16 23 30 659 205 -201 -159 148 205 ---77 121 -2 --11 19 5,124 -3,819 2,187 213 503 6,110 -3,616 1,986 44 747 705 -25 -155 -459 803 168 -434 212 194 38 -663 1,099 1,349 -827 -1,312 303 720 325 -278 -582 -93 -80 1,081 -814 111 Feb. 6 13 -38Z 394 --- -38 -- -1,864 2,788 -2,285 2,683 -685 269 -222 155 243 -551 31 165 -695 -292 Mar. 20 185 120 1,049 1,384 888 224 -1,067 27 -124 -- -8 -3,106 -3,238 -1,001 -122 615 -4 p -85p 6 13 -759 -416 --- -5 -43 370 2,116 -376 -21 -343 72 436 99 -330p 373p 47P -223p 30 -394 1.657 96 23 -51 20 27 I^I-^-^~-t--^ I n_-L~i- teprsectnLs ciange in Systemi / 3/ 4/ 5/ ' __LLlt-L-- ^i~_-d ---- J - ^1 poTrt LLo iroim end-or-perioo; ncluues reaemptions in regular Dill aUCtions. Represents change in daily averae level for preceding period. Includes matched sale-purchase transactions as well as RP's. Sumf of changes in vault cash, currency ih circulation, Treasury operations, F.R. float, gold and foreign accounts, and othe r F.R. accounts. Reserves to support private nonbank deposits. Target change for February and March reflects the target adopted at the Febr uary 20, 1974 FOMC meeting. Target change for previous months reflects the bluebook patterns that are consistent with target ranges that were adopted d uring the month. STRICTLY CONFIDENTIAL (FR) MARCH 15, 1974 TABLE 4 SECURITY DEALER POSITIONS AND BANK POSITIONS Millions of dollars U.S. Govt. Security Dealer Positions Period Bills Coupon Issues (1) (2) Dealer Positions Municipal Corporate Bonds Bonds (3) (4) . . Member Bank Reserves Positions .. Basic Reserve Deficit Borrowing at FRB** 38 gthers 8 Ne York Seasonal Total _ Excess** Reserves (8) (7) (6) (5) (9) 1972 -- High Low 4,291 1,916 1,585 -93 235 0 383 40 796 -133 1,223 12 -5,635 -1,638 -5,720 -1,910 1973 -- High Low 3,796 897 1,299 -301 197 0 384 36 631 -240 2,561 688 -5,243 -1,831 -10,661 -4,048 1973 -- Feb. Mar 2,132 2,490 562 -50 77 24 123 125 207 177 1,594 1,825 -4,187 -4,273 -5,436 -5,847 Apr. May 2,457 1,894 106 421 12 66 60 151 255 161 1,688 1,843 3 30 -3,293 -3,019 -6,577 -5,872 June 2,281 562 33 120 234 1,851 75 -3,507 -6,443 155 163 148 -2,460 -2,689 -3,173 -6,106 -4,940 -5,355 126 84 41 -3,814 -4,469 -4,682 -6,090 -8,186 -9,793 July Aug. Sept. 1,425 1,690 2,745 265 39 395 24 0 6 139 70 80 285 177 216 1,953 2,165 1,852 Oct Nov. Dec. 2,565 2,804 3,441 484 793 973 44 90 105 226 148 276 227 239 307 1,476 1,393 1,298 1974 -- Jan. Feb. 3,102 *2,436 540 *1,619 114 120 254 263 162 195p 1,051 1,193p 18 17p -4,753 -5,262 -10,893 -10,769 - Jan. 2 9 16 23 36 2,890 3,079 3,117 3,238 3,087 858 611 533 553 420 43 141 183 161 42 238 210 134 316 371 388 86 328 -83 259 1,210 776 988 1,182 1,220 31 19 20 13 17 -4,418 -5,135 -6,189 -4,870 -3,229 -9,541 -10,615 -11,252 -11,987 -10,651 Feb. 6 13 20 27 2,759 2,781 *2,121 *2,096 898 2,203 *1,882 *1,508 88 253 95 115 226 210 245 299 124 294 114 241p 998 1,153 1,376 2 5 1, 5 p 18 15 20 16p -4,118 -5,656 -5,726 -5,341 -10,417 -10,719 -10,863 -10,907 Mar. 6 13 20 27 *2,474 *2,466 *1,097 * 848 114 200 p 298 2 80p 92 p 120p 912p 984p 19p 19p -6,003p -5,871p -10, 21p 4 -11,5 1p 1974 a _ NOTE: _ _ ___ . . . , . 1 __ . - L I _h - 4 - --- fnanced oy repu ,aa a Trading positions, which exclude treasury DoLis Government s6curity dealer trading positions are on a commitment basis. Other security dealer positions are debt ments maturing in 16 days or more, are indicators of dealer holdings available for sale over the hear-term. The basic reserve deficit is excess reserves less borrowing at Federal Reserve less net in syndicate, excluding trading positions. issues still in syndicate which are Friday Federal funds purchases. Weekly data are daily averages for statement weeks, except for corporate end municipal issues figures. * STRICTLY CONFIDENTIAL ** Monthly averages for excess reserves and borrowings are weighted averages of statement week figures. CONFIDENTIAL (FR) MARCH 15, 1974 TABLE 5 SELECTED INTEREST RATES Per cent ______Long-Term Short-Term Treasury Bills PerIod .FederalFunds 90-Day 90-119 Day Commercial paper -Year CD's New Issue-NYC 60-89 Day 90-119 Day _, _ Aaa Utilit New Recently sue Offered ___ U.S. Government (10-yr. Constant Maturitv Municipal Bond Buyer NMA Auction Yield. (1) (6) (7) (10) (11) 5.50 3.50 7.60 6.99 6.58 5.87 7.72 7.54 1972 -- High Low 5.38 3 18 1973 -- High Low 10.84 5.61 10.50 5.63 10.50 5.38 10.75 5.50 8.52 7.29 8.30 7.26 5.59 4.99 7.54 6.42 9.37 7.69 1973 -- Feb Mar. 6.58 7.09 6.17 6.76 6.16 6.78 6.28 6.75 7.40 7.49 7.41 7.51 5.13 5.29 6.64 6.71 7.72 7.78 Apr. May June 7.17 7.894 8.49 7.13 7.26 8.00 7.04 7.44 7.98 6.75 7.41 8.13 7.46 7.51 7.64 7.48 7.50 7.64 5.15 5.15 5.18 6.67 6 85 6.90 7.89 7.98 8.07 July Aug. Sept. 10.40 10 50 10.78 9.26 10.26 10.31 9.09 10.25 10.31 9.19 10.40 10.50 8.01 8.36 7.88 7.97 8.22 7.99 5.40 5.48 5.10 7.13 7.40 7.09 8.46 8.83 9.32 Oct Nov. Dec. 10.01 10.03 9.95 9.14 9.11 9.28 9.15 9.06 9.44 9.08 8.91 9.13 7.90 7.90 8.00 7.94 7.94 8.04 5.05 5.18 5.12 6.79 6.73 6.74 9.01 8.84 8.78 1974 -- Jan. Feb. 9.65 8.97 8.86 8.00 9.05 8.09 8.83 7.97 8.21 8.12 8.22 8.23 5.22 5.20 6.99 6.96 8.71 8.48 1974 -- Jan. 9.87 9.76 9.77 9.60 9.47 9,16 8.98 8.88 8.98 8.65 9.38 9.13 9.13 9.00 8.63 9.00 8.88 8.88 8.88 8.50 8.17 8.27 8.25 8.11 8.14 8.25 8.21 5.18 5.22 5.24 5.26 5.20 6.94 6.98 6.99 7.01 7.01 8.71 9.13 8.93 9.07 8.81 8.25 8.03 7.88 7.88 8.13 8.13 8.00 8.13 8.00 8.00 7.88 8.00 8.13 8.05 8.10 8.30 8.19 8.24 8.29 5.16 5.18 5.21 5.26 6.94 6.93 6.96 7.01 8.98 8.15 8.33 8.25 8.38 8.13 8.25 8.37 8 3 3 . p 8.27 8.36p 5.27 5.32 7.08 7.10p Feb. 6 13 20 27 Mar. 6 13 20 27 9.03 I Notes: . _.~ i. i ~ -L .-.. I* I - - . ( - -c . - LrL~LI. 8.26 8.20 8.25 -I~Y~aY-- YIL LL - -- -9- 8.53 8.43 8.44 -_1_ For Columns 7, 8 and 10 the Columns 5 and 6 are one-day Wednesday quotes. Weekly data for columns 1 to 4 are statement week averages of daily data. Column 9 is a one-day quote for Thursday following the end of the weekly date is the mid-point of the calendar week over which data are averaged. stateent week. Column 11 gives FNMA auction data for the Monday preceding the end of the statement wee k. The FNMA auction yield is the average yivod in the bi-weekly auction for short-term forward comitments for Government underwritten mortgages Appendix Table I RESERVES AND MONETARY VARIABLES MCey Shock M;aures Resrves Period Total (1) Nonborrowed (2) Available tn S)pport Pvt eposlts (3) M 1 ()(5) M 2 M 3 6) March 15, 1974 Other Bank Credit Measures Adj,,ted Credit Proxy (7) Total Loans and Investments (8) Total Time (9) Time Other than CD's (10) Thrift Institution Deposits (11) CD's (12) Nondeposit m13)s (13) U.S. Gov't (14)l (1 (Dollar Change in Billions) (Per Cent Annual Rates of Growth) Annually: 1.6 let 2nd 3rd 4th Qtr. Qtr. Qtr, Qtr. 1972 1972 1972 1972 + 8.7 +12.6 +4 4 415.1 + 9.1 +12 6 1it 2nd 3rd 4th Qtr. Qtr Qtr. Qtr 1973 1973 1973 1973 + 6.4 + 6.9 410.6 +6.1 - +30.1 +26.8 -38.5 +1.8 +20.1 +0.5 +0.2 +24.9 -13.5 +21.9 +26.7 -1.6 +14.4 +45.9 -30.2 - 0.9 + 9.2 3.6 + 7.0 +11.3 +13.6 +11.7 + 5.3 +18.6 + 0.8 +1.2 +1.8 +14.5 +15.7 +14.3 +14.8 +18.9 +14.7 +16.2 +13.9 + + + + -0.3 +0.1 +0.3 +0.3 +19,9 412.7 +11.4 +22.7 +17.8 +14.0 + 5.8 +13.6 49.4 +3.1 47.5 +11.2 + 7.4 + 4.7 - 3.9 +0.5 +0.7 +1.7 40.1 +17.8 +23.7 +17.2 +13.1 +16.6 +8.2 +13.3 +16.7 +4.1 +6.7 +5.0 +1.5 +15.8 +15.0 +16.5 +22.3 +28.2 +22.5 +18.9 +11.2 412.5 +19.2 + 9.8 + 3.4 + 3.3 1-10.7 +21.5 +14.6 +15.8 +14.6 +10.2 +9.4 +7.8 +10.8 +6.5 + + + + + + + + + + + + 1.3 4.4 5.5 3.8 2.9 0.7 1.9 2.4 0.4 2.9 1.8 0.8 2,7 1.1 +0.6 -0.5 +0.4 +0.2 +6.3 +0.2 +0.9 +0.6 +0.2 -0.4 40.2 +0.3 +17.3 +15.4 +10.3 + 7.8 +13.8 + 7.0 +16.6 + 8.0 +20.7 +10.0 + 9.6 + 6.9 +10.4 +12.2 +10.5 +11.6 +10 2 +17.1 +15.7 +11.1 +13.0 +15.8 + 7.8 +12.5 +14.2 +14. 6 +12.6 +10.5 +3.3 +15.9 -2.9 410.3 +10.0 +9.9 +17.3 +18.5 +10.1 +13.3 +1.0 -6.3 +9.4 46.9 49.7 +11.1 +22.3 +15.4 +11.0 +11.1 +8.6 +17.0 +5.7 +1.6 +2.7 +5.6 +12.5 +0.8 + +12.7 -0.2 +0.6 +14.7 +15.4 +14.8 + 6.7 + 8.6 1lt Half 1973 2nd Half 1973 Quarterly 4.4 + 6.0 +11.2 +11.3 +8.3 +11.5 +7.2 +10.8 + 9.9 + +7.1 +17.5 +16.9 +11.0 + 4.1 +9.3 +7.8 +7.7 -8.4 -7.6 +0.4 +3.0 +17.9 +18.2 +15.7 +15.9 +8.2 +9 4 +11 6 +10 6 16.0 +7.2 +10.6 + 7.8 +14.4 + 7.7 +10.4 +19.4 +8.1 +11.2 +14.6 +12.6 +8.7 +6.9 +10.1 +9.3 1970 1971 1972 1973 Sefi-tAlnallY Ist Hlf 1972 2nd Half 1972 41.4 + 8.6 0.7 3.7 2.4 3.6 Mnnthly. 1973--Jin. Feb Mar. Apr Pay June Tuly Aug. Sept. Oct. Nov Dec. 1974-Tan. Feb. p -21.1 +10.5 +14.7 +5.4 +0.5 +27.2 -5.1 +9.4 +12.1 -4.1 +10.5 +35.7 -24.6 +2.7 +6.4 +7.2 +8.6 +8.2 +7.4 1 40.1 +0.2 --------------*---*--l-_-----------^ -I---------_____1----1-----__D- 1rapliminirv WOTY Reserve Requlremeht on rarodollr borrowings are included beginning Ottober 16, 1969, and requireients on bank-related commerrial paper ate included beginning October 1, 1970. Growth rates are ansedon etfjrltea monthly average levels derived by averaging end of current month and end of previows month reported data. i/ ---- March 15, 1974 Appendix Table II RESERVES A) MONETARY VARIABLES (Seasonally adjusted, billions of dollars) RFSRVFS rnt 11 (117 Non borrowed (2) BANK CREDIT MEASURES MONEY STOCK MEASURES --- 6 Avnilahle to Support Pvt. DtP, ltq___ - Total (3) ----r------- M~ Pv. lpen OTHER .- -, Adjusted Total Credit Proxy Loans & Investments Time Other than CD's Thrift Institution Denosits-- Non- CD's Deposits Funds (13) U.S. Gov't Demand (15) ANNUALI\ fr ncr 1 70 1171 nre 1077 29,193 31.290 28,861 31.137 30,360 27,099 23,965 29,053 221 2 235.2 755.7 172.2 182.6 198.7 475 2 473.0 525.5 32,199 31,634 11,037 11,910 30, 040 30,085 29,439 29,368 29,621 256.7 257.9 258.1 199.6 200 4 200.1 32,300 32,4645 32,459 30,589 30,602 30,608 29,867 30,114 30,548 259.4 262 4 265.5 332.9 364.3 406.4 438.5 487.6 559.0 229.2 270.9 313.3 203.9 237.9 269.9 216.1 253.9 296.9 25.3 33.0 43.4 6.5 6.1 6.1 529.6 532.3 534.6 409.7 413.5 421.2 567.3 578.5 586.8 317.6 323.5 331.1 272.8 274.4 276.6 300.8 304.4 307.0 44.7 49.1 54.6 6.7 6.1 7.6 200.8 203.4 206.2 538.3 543.6 569.4 426.6 430.5 434.5 593.2 601.4 605.5 337.3 342.6 345.8 278.9 281.3 283.8 309.4 311.4 314.2 58.4 61.3 62.0 7.1 5.2 5.3 641.2 726.9 822.4 MONTII 1973- lan reb NMr Apr Mhy hlv 33,576 31,906 Sept. 34,173 31,622 31,761 32,321 31,358 32,038 32,396 266.4 266.2 265.4 207.0 206.4 205.2 552.0 554 9 556.6 437.6 443.8 445.9 612.2 620.7 622.8 349.4 355.0 357.9 285.6 288.7 291.2 315.9 315.9 316.6 63.9 66.3 66.7 3.9 4.8 5.0 Oct . Nov. 34,942 34,857 35,105 33,466 33,463 33,807 32,845 32,714 32,912 266.5 268.8 270.4 561.6 566.7 570.7 446.5 447.5 449.6 626.3 628.9 629.7 358.9 359.9 363.1 295.1 297.8 300.3 318.3 320.2 322.5 63.8 62.0 62.8 6.0 5.8 4,9 35,850 35,115 34,799 33,923 32,799 32,799 269.6 272.6 206.1 207.9 2B.8 207,8 207.8 210.0 573.7 580.1 454.3 454 6 638.0 369.6 374.1 304.1 307.5 324.7 326.7 65.5 66.6 6.2 3.0 Dec. 1974-- -a Feb. Weekly 1973--0er. 1974-- an. Feb. Mar. 646.0 5 17 19 26 35,108 34,623 35,211 35,330 33,633 33,321 33,722 34,292 33,041 32,561 32,869 33,209 269.1 270.7 270.9 271.0 208.1 209.2 209.4 208.9 568.2 569.7 571.8 571.6 447.6 447.9 449 3 452.5 360.8 361.9 363.1 363.7 299.1 298.9 300.9 300.7 2 9 16 23 30 35,312 35,752 36,521 15,747 35,628 34,102 34,976 35,533 34,565 34,408 32,921 32,747 33,075 32,488 32,875 270.3 269.5 270.0 268.9 268.4 208.8 207,8 207.8 208.2 206,9 206.5 57.6 572.0 573.7 573.7 573.7 452.5 453.1 453.5 454.5 454.0 366.5 367.3 368.4 370.6 372.3 302.2 302.5 303.7 304.8 305.3 35,199 35,167 35,277 34,899 34,201 34,014 33,901 33,644 32,641 32,739 32,795 32,956 270.9 271.8 274.6 272.2 208.5 209.3 211.9 209.7 577.3 579.1 582.6 581.0 455.5 454.5 453.7 454.7 373.2 374.2 374.4 375.0 306.4 307.2 308.0 308.8 6p 34,632 33,720 33,108 275.9 212.8 584.7 458.1 374.8 308.8 6 13 20 27p ' 6 ..-------p - Preliminary NOTF Reserve requirements on Eurodollar borrowings are included beginning October 16, 1969, and requirements on bank-related comercial paper are included beginning October 1, 1970. Adjusted credit proxy includes mainly total member bank depoit- subfect 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 coimercial paper figures which Are for last day of month. Weekly data are not available for M,, total loans and fnvestments and thrift institution deposits. 1/ FPtimated monthly average levels derived by averaging end of cuerpnt month and end of previous month reported data. Appendix Table III Growth "Rate in Money Supply (Per cent change at an annual rate) M2 M M M 0 M I 9.0 5.3 12.3 11.0 14.6 13.2 II 6.2 8.2 8.9 9.8 10.9 12.0 8.7 8.2 10.8 10.8 12.8 12.6 IV 9.9 8.4 10.6 10.2 11.8 11.8 I 3.8 7.0 1972 III 1973 II III IV 11.5 7.5 -0.2 5.5 7.5 3.9 6.9 11.1 5.2 10.1 Q M Q 8.a 9.4 10.7 8.7 10.4 9.1 7.9 4.5 7.2 8.5 9.2 7.3 M = Annual rates of growth calculated from average levels in the final months of the quarters. Q = Annual rates calculated from average levels in all three months of the quarters. 

Federal Reserve (1974, March 18). Bluebook. Bluebooks, Federal Reserve. https://whenthefedspeaks.com/doc/bluebook_19740319

@misc{wtfs_bluebook_19740319,
  author = {Federal Reserve},
  title = {Bluebook},
  year = {1974},
  month = {Mar},
  howpublished = {Bluebooks, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/bluebook_19740319},
  note = {Retrieved via When the Fed Speaks corpus}
}