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Content last modified 6/05/2009. (CONFIDENTIAL FR) April 12, 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) April 12, 1974 MONETARY AGGREGATES AND MONEY MARKET CONDITIONS Recent developments M1 grew at a 10.6 per cent annual rate in March, a little (1) more than projected in the last bluebook. Although growth in April is estimated to be somewhat slower, on average, the extent of the slowing is now expected to be less than anticipated. Thus, for the two months combined, M1 now appears to be expanding at slightly above a 9 per cent annual rate, compared with the Committee's 5½ to 8½ per cent range of tolerance adopted at the last meeting. Growth of M2, on the other hand, appears to be within the Committee's two-month range of tolerance,as shown in the table below. With business loan demands very strong, and with large CD run-offs expected around the tax date, banks have bid actively for large CD's and non-deposit sources of funds. As a result, expansion of the adjusted credit proxy has been much more rapid than anticipated--accelerating to a 12 per cent annual rate in March, and a projected 23 per cent annual rate in April. Growth of Monetary Aggregates and RPD's in March-April Target Period Reserve and Monetary Aggregates (Growth at SAAR in per cent) RPD's Range of Tolerance Latest Estimates 4 - 7 14.1 M1 5½ - 8½ 9.2 M2 6¾ - 9¾ 8.8 Ave. for Statement Memo: Federal funds rate (per cent per annum) 9 - 10½ week ending March 20 - 9.33 April 10 -10.02 -2(2) Because of the rapid expansion in CD's and bank credit, RPD growth appears likely to be well in excess of the upper limit of its range of tolerance. As may be seen from the table below, CD's and nondeposit sources absorbed considerably more reserves than originally expected. Private demand deposits also absorbed more reserves than expected, but the overshoot was considerably less than for CD's. Comparison of Projected Changes in RPD's by Use March-April 1974 (In millions of dollars) Projections as of March 19, 1974 FOMC meeting Projection 329 769 Change in Total RPD's 1/ Current Change in Category of Use: 279 Private demand deposits Time deposits other than large CD's 50 406 CD's and nondeposit funds 35 Excess 1/ Changes from February to April 1974. (3) In accordance with the discussion at the March 19 meeting, early in the inter-meeting period the Desk sought reserve conditions that would raise the Federal funds rate from the 9½ per cent level just reached at the time of the meeting to a level more consistent with the Committee's desires with respect to the monetary aggregates. Early action was considered desirable because of expected Treasury financing operations -3at the end of March; a tax bill was auctioned on March 26 and a 2-year note on March 28. As the aggregates strengthened, the Desk became an even more reluctant supplier of nonborrowed reserves. By the close of the period, reserve operations were expected to be consistent with a Federal funds rate of 10 per cent or somewhat higher. Over the three full statement weeks ending within the inter-meeting period, member bank borrowing at Federal Reserve Banks has averaged nearly $1.5 billion, about $350 million larger than in the three preceding statement weeks. (4) The combination of heavy business credit demands, tighter money market conditions, and developing evidence that the economy was not so weak as anticipated contributed to large across-the-board interest rate advances during the inter-meeting period. Advances in short-term rates ranged generally from 50 to 100 basis points. With rates on commercial paper and large bank CD's rising steeply, major banks came under particularly heavy pressure as both their business loans and the costs of funds to cover such loans increased. Reflecting this squeeze, the bank prime rate moved upward in rapid sequence from 8¾ at the time of the last meeting to 10 per cent at a number of banks in the latest week. Bond yields rose 35 to 75 basis points during the period,with the consequent sudden large capital losses leading to some unsettlement in markets. (5) Very recently, however, securities markets have shown some signs of stabilizing. This week's offerings of new corporate and municipal securities have been well received at the higher interest rate levels, and yields on some key U.S. Government securities have edged a little lower. Yield declines were quite sharp in the bill market, where -4there is a technical shortage of supply. The 3-month Treasury bill, for example, has traded most recently at 8.25 per cent, down from the recent high of 8.65 per cent. (6) The large recent increases in rates on competing market securities have begun to exert pressures on non-bank financial intermediaries. While flows to these institutions remained quite favorable in March, New York City savings banks--typically the first to suffer from disintermediation--experienced large withdrawals in early April, comparable in relative magnitude to those of early April 1970. Industry reports suggest that intermediaries generally are taking a more cautious approach on mortgage commitments, and the most sensitive interest rates in mortgage markets have begun to rise. (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. Projected figures on the two bases are shown in appendix Table IV for the three alternatives presented in the next section. Average of Past 3 Past Past Past Calendar Years 1971 12 Months Mar. '74 6 Months Mar. '74 3 Months Mar. '74 Past Month Mar. '74 -1973 over Mar. '73 over Sept. '73 over Dec. '73 over Feb. '74 Total reserves 8.5 6.5 3.9 1.7 -5.3 Nonborrowed reserves 7.6 8.6 7.5 1.6 -9.8 Reserves available to support private nonbank deposits 8.8 8.9 3.9 6.2 12.1 6.9 6.5 7.2 6.7 10.6 10.3 9.3 10.0 9.5 8.7 M3 (M2 plus deposits at thrift institutions) 11.7 8.5 9.2 9.0 8.7 10.5 8.2 6.0 8.6 11.9 Loans and investments of commercial banks2/ 12.8 11.7 10.4 16.2 17.1 1.1 0.2 1.6 1.1 0.9 0.6 -2.3 Concepts of Money M 1 (currency plus demand deposits)1/ M2 (M1 plus time deposits at commercial banks other than large CD's) Bank Credit Total member banks deposits (bank credit proxy adj.) Short-term market paper (Monthly avg. change in billions) Large CD's 1.0 Nonbank commercial paper 0.2 0.7 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) Alternatives presented for Committee consideration are summarized below (with more detailed figures shown in the table on p. 6a). Alt. B Alt. A Alt. C Targets (2nd & 3rd qtrs. combined) M1 6¾ 6 5¼ M2 8¼ 7¼ 6¼ Credit proxy 11¼ 10½ 9½ Associated ranges for April-May RPD 10¾--12¾ 9¾--11¾ 8¾-10¾ M1 6½ --8½ 6--8 5½--7½ M2 7¼--9¼ 6¾--8¾ 6¼--8¼ 8¾--10¼ 9¼ --10¾ 9¾--ll¼ Federal funds rate range (inter-meeting period) (9) Alternative C represents continuation of the strategy with regard to the aggregates adopted by the Committee at its last meeting. That is, the alternative contemplates return of M1 to the 5¾ per cent long- run growth path (depicted in the chart on the following page) by September. Accomplishing this would appear to require interest rates somewhat higher than indicated at the last meeting, and also higher than those currently prevailing, in view of the stronger growth in nominal GNP that is now projected for the second and third quarters. The Federal funds rate range for the inter-meeting period thought to be consistent with the alternative C pattern for the aggregates is 9¾--11¼ per cent, centering on 10½ per cent. MONEY SUPPLY AND LONGER RUN TARGET PATH RATIO SCALE, BILLIONS OF DOLLARS -I 280 I 53 GROWTH 5 ho GROWTH RATE OF GROWTH 5 7% DEC. '72 TO DEC. '73 270 i.......- - 260 i 1 I J O S 1973 , , i I I A N D , , , J F M , _ A M 1974 . J L A S -6aAlternative Longer-Run Targets for Key Monetary Aggregates 1974 Mar. Apr. May June Sept. Quarters: 1974 2nd Q. 3rd Q. M3 Alt. A M1 Alt. 274.9 276.8 278.4 279.8 284.3 274.9 276.7 278.1 279.4 283.4 7.1 6.4 6.5 5.7 6.0 4.7 .2 .3 7.5 7.0 6.8 5.7 7.6 7.1 6.3 4.8 8.3 6.9 7.9 6.1 7.4 5.6 9.0 7.5 8.8 6.7 8.6 5.9 8.1 6.8 7.8 5.4 B Alt. C Alt. A Alt. B Alt. C Alt. A Alt. B Alt. C 274.9 276.6 277.9 279.0 282.3 584.3 588.7 592.4 596.3 584.3 584.3 588.5 591.4 594.2 602.6 913.4 919.6 924,8 930.8 913.4 919.4 924,1 929.0 942.6 913.4 919.3 923.4 927.7 938.9 588.6 591.9 595.2 605.6 608.6 Rates of Growth 947.3 Months: Apr. May Adjusted Credit Proxy Alt. B Alt. C Alt. A 1974 RPD Alt. B Alt. C 471.3 34,952 35,764 35,914 35,671 33,122 33,571 33,770 33,856 33,122 33,560 33,718 33,792 33,122 33,549 33,662 33,725 481.5 36,615 36,466 36,311 34,628 34,478 34,322 9.0 8.1 8.2 7.2 8.9 9.1 27.9 5.0 16.3 7.1 459.3 468.1 469.6 471.9 459.3 468.1 469.3 Sept. 485.3 483.3 10.7 Alt. A 34,952 35,775 35,971 35,739 459.3 468.2 470.0 472.6 11.6 Total Reserves Alt. B Alt. C 34,952 35,786 36,023 35,805 Mar. Apr. May June Quarters: 1974 2nd Q. 3rd Q. Alt. A 11.0 9.7 10.5 23.0 23.0 8.7 9.8 9.1 7.3 7.1 Months: Apr. May 23.3 4.6 3.8 3,1 28.6 8.0 28.2 6.6 15.9 5.7 15.5 4.0 -7(10) Alternative B calls for somewhat more rapid growth in the monetary aggregates over the second and third quarters, typified by a 6 per cent growth rate for M 1 . The B growth rates seem obtainable with little further significant change in money market conditions and short-term interest rates, in light of the sharp increases in short-term rates that have already occurred during the past two months. Thus, the Federal funds rate under this alternative centers around 10 per cent. The still more rapid longer-run growth rates of alternative A--including a 6¾ per cent rate for M 1 over the second and third quarters--appear likely to be associated with declines in both short- and long-term interest rates. (11) Over the April-May period, M 1 growth is likely to be somewhat above the long-run path. Under alternative B, for example, M 1 growth is indicated in the 6--8 per cent range. These above-path in- creases reflect in large part the sizable expansion in M 1 currently estimated for April. Given the lagged relationship between interest rates and money demand, however, M 1 growth is expected to moderate later as it approaches the longer-run path. (12) Between now and mid-May, short-term interest rates could decline somewhat under alternative B. Indeed, the very recent drop in the 3-month bill rate probably is anticipating some of the potential for downward rate adjustments. Any decline that did develop over the next few weeks is very likely to be temporary, assuming a 10 per cent Federal funds rate. Over the longer run, the 3-month bill rate would seem most likely to fluctuate around a 8½ --8¾ per cent range. -8(13) A number of factors might contribute to temporary easing in short-term markets in the weeks immediately ahead. The extremely large issuance of new CD's by banks, which has contributed to recent upward pressures on short-term rates, has partly reflected advance preparation for large tax date maturities, and those pressures should abate after mid-April. Funds from large oil payments in April may also become available to the short-term sector of U.S. credit markets via U.S. banks' use of the Euro-dollar market. In addition, that portion of the $4½ billion of maturing April tax bills not turned in for taxes would generate reinvestment demand for short-term securities. Finally, the Treasury's May refunding--to be announced on May 1--might include some cash redemption of the $5½ billion of maturing publicly held debt because of the possibility of debt ceiling problems. (14) A rise in the funds rate over the next few weeks--such as would be likely under alternative C-- would generate market expectations of a further tightening of monetary policy. This would offset any tendency for short-term rates to decline, even temporarily, and would probably result in further upward adjustments. Over the next few months, the 3-month bill rate could be around 9 per cent, and possibly higher in the summer when Treasury cash borrowing demands are seasonally strong. (15) Under alternative B, with market interest rates little changed on balance from current high levels, net savings inflows to nonbank thrift institutions are likely to be slower than the 8 per cent first-quarter pace. We would estimate a growth rate of about 6 per cent in the second quarter and 4 per cent in the third, assuming no change in -9Regulation Q. Under alternative C, these institutions would come under greater pressure, of course, but in either case some tightening in the availability of mortgage loan commitments would be likely, compared with the situation in the early months of the year. (16) Net inflows to commercial banks of time and savings deposits other than large CD's are likewise expected to be slower over the months ahead than in the first quarter, though the experience of banks may continue to be somewhat better than at thrift institutions. Commercial banks appear to be having greater success than the specialized thrift institutions in attracting large time deposits (those of $100,000 or more) that are not subject to Regulation Q ceilings. Such deposits are reported as part of the other time and savings category and, unlike large negotiable CD's, are included in the M2 measure. (17) We would expect banks to offset some part of any loss in other time and savings deposits through increased issuance of large CD's or greater borrowing in theEuro-dollar market, depending on relative costs. However, under any of the alternatives presented, the amount of borrowing by banks through CD's and nondeposit sources is expected to be considerably less than in recent weeks, partly because preparations for tax-date runoffs will have been completed and partly because business loan demand on banks is expected to moderate from the exceptionally rapid pace of March. Moreover, it is probable that the spread between the bank lending rate and the commercial paper rate will favor bank credit less than was the case in March. -10(18) In intermediate- and long-term debt markets, demands are likely to remain strong over the weeks ahead. Corporate and State and local government bond offerings remain quite high, despite recent postponements. Also, the Treasury refunding will probably involve marketing securities with mainly intermediate-term maturities. Given the volume of private and governmental securities in prospect, bond yields could rise considerably further under alternative C. High-grade corporate issues, which are already above their summer highs, could approach their 1970 peaks, and Treasury notes and bonds could rise above them (the 20 year Treasury bond is already above the earlier peak). Under alternative B, further upward adjustments in bond yields are likely to be comparatively modest, given the increases that already have occurred and the stabilizing tendencies that we would expect in short-term markets. (19) Under alternative A, savings inflows to thrift institutions would be expected to recover to close to their first-quarter pace, as receding market rates provide less competition for savings funds. At banks, deposits inflows--both demand and consumer-type time and savings-would probably be well sustained. As a result, credit demands could be financed without banks adding to pressures on credit markets through aggressive issuance of large CD's or reductions in portfolio liquidity. -11Proposed directive language (20) 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. For all three alternatives, it is proposed to include a reference to Treasury financing because the regular May refinancing will be announced on May 1. Alternative A To implement this policy, while taking account of THE FORTHCOMING TREASURY FINANCING AND OF international and domestic financial market developments, [DEL: the including prospective Treasury financing] the Committee seeks to achieve moderate would that bank reserve and money market conditions [DEL: CONSISTENT WITH growth in monetary aggregates over the months ahead SUFFICIENT TO ACCOMMODATE MODERATE EXPANSION IN REAL GNP AT THE HIGHER DOLLAR VALUES NOW PREVAILING. Alternative B To implement this policy, while taking account of THE FORTHCOMING TREASURY FINANCING AND OF international including and domestic financial market developments, [DEL: financing] Treasury prospective the the Committee seeks to achieve bank reserve and money market conditions that would moderate SOMEWHAT growth in monetary aggregates over the months ahead. -12Alternative C To implement this policy, while taking account of THE FORTHCOMING TREASURY FINANCING AND OF international and domestic financial market developments, including the [DEL: financing] Treasury prospective the Committee seeks to achieve bank reserve and money market conditions that would moderate growth in monetary aggregates over the months ahead. (21) In the event that the Committee wishes to couch the operational paragraph of the directive in terms of money market conditions, the specifications of alternative B might be associated with language indicating that "...the Committee seeks to maintain about the prevailing money market conditions, provided that the monetary aggregates appear to be growing at rates within the specified ranges of tolerance." CHART 1 STRICTLY CONfIDENTIAL (fR) 4/12/74 RESERVES AVAILABLE TO SUPPORT PRIVATE NONBANK DEPOSITS REVISED SERIES BILLIONS OF DOLLARS 40 38 7% growth for Mar Apr S h1 4/10 741 -36 "~vJS Fv~l~ rr - 32 J F M 1974 M *Break J 1973 in Series Actual Leve S D M J S 1974 1 of RPD After Changes in Reserve Requirements A M CHART 2 STRICTLY CONFIDENTIAL (FR) 4/12/74 MONETARY AGGREGATES REVISED SERIES NARROW MONEY SUPPLY M1 BILLIONS OF DOLLARS 81/2% growth for Mar Apr 51/2% growth MONEY SUPPLY M2 I I Il' 9%3% growth for Mar Apr S 6 1973 1974 J f 1973 4/ 10 74) - % growth M A 1974 STRICTLY CONFIDENTIAL (FR) CHART 3 MONETARY AGGREGATES ADJUSTED CREDIT PROXY BILLIONS OF TOTAL RESERVES "4h~ I 1973 * reak in series, Actual Level of Total 'Reserves After Changes in 1 1 1974 Reserve Requ itements 1 , I I l l! CHART 4 MONEY MARKET CONDITIONS AND INTEREST RATES MONEY MARKET CONDITIONS PER CENT 1 12 _1 RESERVES BORROWED E _L_ IV V INTEREST RATES PER CENT 13 INTEREST RATES Long-term 4 BILLIONS OF DOLLARS -1 3 NET BORROWE J1IJLu_ 1973 1974 1973 1974 1973 1974 PER CENT 11 STRICTLY CONFIDENTIAL TAPLE 1 BANK RESERVES (ACTUAL AND CURRENT PROJECTIONS) ------ ----- ------ ------- ----- APRIL 12, 1974 - - - - - - - - - - - - - - - - - - - - - ------ - - - - - - - - - - - - - - - - - - - - - - -- REQUIRID HESEHVES I AGPRFGATF RESFRVES II---------------------------------------II SFASONALLY ADJUSTED SII--------------------------------------------------------------------------------------------------------II TOTAL NONRnPROWED I PRIVATE OTHER CD'S AND GUV*T AND IFon SEAS AOJ I NON SEAS AOJ II RFSERVFS RFSERVES I DEMAND TIMF DEP NON DE INTERRANK - -------------------------------------- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (1) I (?) I (3) (4) ( ) () ( ) (") SII I REcERVER AVAILABLE FOR I PRIVATE NONBANK DEPOSTTS II MONTHLY LFVFLS-%MILLION II ------------------------ I 1Y73--nEr. I I 3.912 I 1974--JAN. 9 M F . MAP. APR. I ANNUAL RATFS OF rHANGF *---------------------QUARTERLY 33,167 II 32.799 37.791 339122 (31.560) 33,467 32,875 32.893 (33.641) I I I I II I 1I II 11 I 35.105 339807 35.850 35.108 34.952 (35.775) 34.799 33.911 33.638 (34,412) ?2.?27 I 20.201 (20.1 ) I 20.30 20.030 8.460 3.918 3.807 3.967 4.0j7 ( 4 37d) 8s525 8.601 896'4 ( 89651) 2.193 3.051 2.r11 1.831 ( .p21 ) I II f I -I I I 1 1 II 1973--3P0 OTR. 4TH QTR. 4.2 1.4 I I 6.?2 I I I 10.6 6.1 11.3 13.4 1.7 1.6 10.5 14.4 I 90.-b.1 1.4 5.A 15.7 1.7? 1.3 '.2 42.4 4.3 -?7.4 II 1974--IST QTR. I 1 SII MONTHLY 1973--DEC. 9.4 1 1974--JAN. FFH. MAP. APR. ( 6.9 -0.3 12.1 15.9) I I II I II I I I 1 I 1 I I 15.) 1 35.7 -24.8 -5.3 28.3) 45.9 -30.4 -9.8 ( 27.6) 1 4.6 -15..710.7 1.1 ( 1.6) ( 7.4 -0.4) ( /.0 .4 21.2 9.6b) ( ( i.b) ( 61.3) 9.2 SII MAR.-APR. I 14.1) ( 11.4) ( 8.8) I .4) SII WFFWLY LFVFLS-SMILLTONS -------------------I 1974--FEP. MAR. 6 13 0 I I 32641 32.739 329795 3?7921 1 33,134 33.165 32.873 32.812 32.702 34.201 34014 33,901 33.614 I I I I ?0.033 19.874 20*107 20,097 8.578 8.579 8,613 8,626 3,906 3,992 3.961 3.992 2.559 d.42A 29482 1.044 32.810 34.663 33,741 I 20,351 8.647 4.017 1.530 13 32.937 32.593 II 34.792 33.809 I 20140 8.662 49019 1.859 P0 27 1 3.214 33.090 33.029 32.954 II 11 35.233 34.7A1 31,750 33.068 I I 20.460 20,277 8.658 8.648 4,007 4.068 ,.019 19691 3 10 33.319 33,304 33.195 33.036 It II 35,475 35.217 31,972 34,022 I 20.?63 20.216 8.051 8.647 4.099 4.204 2.156 1.913 27 1 I h I 1 II APR. 35.199 35*167 35.277 34.865 II II II 11 II II I II SII NOTE, DATA SHOWN IN PARENTmESES ARE CURRENT PROJECTIONS. AT THE FOMC MEETING OF THE COMMITTEE AGREFD ON A RPO RANGE OF 4 TO 7 PERrENT FOR THF MAR-aPH PERIOb. MARCH 19 1974 STRICTLY CONFIDENTIAL --------------------- TABLE 2 APRIL MONETARY AGGREGATES (ACTUAL AND CURRENT PROJECTIONS, SEASONALLY ADJUSTED) l------------l-l--ll--l-l---ll-ll---ll-------l-------i--l-l--l--l----ll---l--- I I I PFPITO MONEY SUPPLY NARROW I BROAD (MI) I (M2) I I I (2) (1) ADJUSTED CREDIT PROXY (3) II U.S. II GOVT. II DEPOSITS II I I I (4) I-----l-----l-ll------------l-ll--l----l TIME TOTAL AND SAVINGS DEPOSITS I OTHFR I I THAN CD S I CD S I NONDEPOSIT I SOURCES OF I FUNDS (5) (6) (l) 363.1 300.3 b2.8 7.4 65.5 66.6 67.7 (73.1) 7.b 7.7 8.7 ( 9.3) II MONTHLY LEV'FLS-ILI IONe ---------------------- I 1973--DEC. 570.7 270.4 I 449,6 I 4.9 II 269., 1974--JAN. 272.5 274. (276.7) MAR. APR. I I I I I -0.2 7.54 TR. I 6.7 MUNTW|_Y -- *---1973--DEC. 454.3 454.8 459.3 (468.1) 11 1 II II 6.2 3.0 3.7 ( 4.5) I I I 369.6 374.2 377.1 (384.9) 304.1 307.6 309.4 (311.9) 14.n 5.8 10.4 12.5 I I I II II PEurFNT ANNUAL GQO.TH --------------------OIIAPTFLY --------1973--300 orT. &T- 'TR. 1974--1ST I 573.7 580.1 5B4.3 (588.6) I 5.2 10.1 10.5 3.3 9.5 8.6 II II II II II 12.1 II II II I 1 7.1 1 I 8.5 I 5.6 10.7 II 10.1 I II 19fq--JAN. I FEP. MAR. -3.6 12.9 10.6 ( 7.4) I I 6.3 13.4 8.7 (8.8) 12.5 1.3 11.9 (23.0) 21.5 14.9 9.3 (24.8) II II II II I 15.2 13.8 7.0 (9.7) II MA.-APP. WFFYLY LFVFLC-$SHLLTONq ----------------------FF4. I 8.8) 9.2) (17.5) (17.2 ) ( 8.4) 373.; 374.p 374. 375.1 306.4 307.2 308.0 308.8 67.0 66.4 66.2 7.2 7.8 7.9 7.7 374.9 375.9 379.4 308.9 309.0 309.5 309.6 65.9 66.8 67.1 68. 8.0 8.1 8.8 9.2 381.3 385.7 310.1 311.6 II II I A I 13 20 /7 ( 270.4 I 577.3 271,. I 579.1 582.6 591.2 274,* 272.7 I I 455.5 454.5 453.7 II II I 4.5 454.a II 3.1 2.5 I .6.8 II MAP. * 13 -n P7 APR. 274. I I I 274.3 I 584.7 b83.9 584.0 5839 276.i 275.7 I 5A6.1 587.3 275. 274. I P 3 P In PFr I I 4b8.2 456.4 459.3 460.3 II I I 11 466.4 468.5 I NOTE! DATA SHOWN IN PARENTHESES 4.2 3.0 4.0 3.6 4.0 5.0I I 12, 37 I1 ARE CURRFNT DROJFrTIONS. .6 I I I 71.2 74.1 I 9.6 9.2 ( P - PRELIMINARY PE - PARTIALLY ESTIMATED 1974 STRICTLY CONFIDENTIAL (FR) APRIL12, 1974 TABLE 3 RESERVE EFFECTS OF OPEN MARKET OPERATIONS AND OTHER RESERVE FACTORS (Millions of dollars, not seasonally adjusted) Daily Average Reserve Effect 2/ Open Market Operations 1/ Bills & Accept, (1) Coupon Agency RP's Issues (2) lssues (3) Ne: 3/ (4) Open Market Total (5) Operations (6) h Member in reserve categories . . [ agt Other 4/ req. res. against available res 5/ available Bank Borrowing (7) Factors (8) U.S.G. and interb., (9) (6)+(7)+(8)-(9) (10) reserves 5/ (11) Monthly 1973 -- 1974 -- -- -30 531 7 -583 -282 1,150 -149 434 475 1,972 -1,008 1,862 -533 226 172 71 128 295 -902 -831 2,440 -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 -37 -64 179 30 190 -10 74 122 -100 -1,531 -328 71 1,780 1,031 9 -74 -254 143 166 698 -1,505 -302 773 -356 -323 702 -997 113 895 -875 -30 Sept -494 Oct. Nov. Dec. Jan reb. March 315 April May weekly 1974 -- Feb. 6 13 70 27 -382 394 185 -124 -- Mar. 6 13 20 27 -759 -416 451 -18 Apr 30 -- -38 -120 -8 -1,864 2,288 1,049 -3,106 -2,285 2,683 1,384 -3,238 -685 269 888 -1,001 -222 155 223 -125 243 -551 -1,071 589 --190 -- -5 -43 -170 370 2,116 -893 -1,474 -394 1,657 -252 -1,321 -376 -21 677 136 -339 71 501 229 --- --- 251 -5 494 -785 -210 -308 -- --5 3 10 251 -- 31 165 101 -427 -695 -292 -61 -110 497 65 -732 -812 -326 332 25 -387p 108 -217 421 60p 480 752 53 p -182p 2 232p -159p 17 24 11 rfesernts chan e in S tem'ni ortfot l fm ef t r n efA-An nfr > j U VL YZIIVYI LIICLUUI~CO rbafr mfnn *e *iw nnd Arm -I-FA11 . ill LCU~III~ILLY1IP LLI LTbYLIIL YL~ naurins ~Y~LIV1 Y Represents change in daily average level for preceding period. Includes matched sale-purchase transactions as well as RP's. Sum of changes in vault cash, currency in circulation, Treasury operations, F.R. float, gold and foreign accounts, and other F.R. accounts. Reserves to support private fonbank deposits. Target change for March and April reflects the target adopted at the March 19, 1974 FOMC meeting. Target change for previous months reflects the bluehook patterns that are consistent with target ranges that were adopted durihg the month. STRICTLY CONFIDENTIAL (FR) APRIL 12, 1974 TABLE 4 SECURITY DEALER POSITIONS AND BANK POSITIONS Millions of dollars U S Govt. Security Dealer Period Bills Positions Coupon Issues (1) 1973 -1974 . Dealer Positionqs Municipal Corporate Bonds Bonds _ ___ Excess** Reserves (2) (3) (4) (5) Total Member Bank Reserves Posltion Basic Reserve Deficit Borrowing at FRB** Seasonal 8 New York 38 Qthers (6) (7) (8) (9) High Low 3,796 897 1,299 -301 197 0 384 36 631 -240 2,561 688 163 3 -5,243 -1,831 -10,661 -4,048 -- High 3,238 2,203 253 371 388 1,713 48 -6,189 -11,987 -- Low 1,501 154 14 46 -83 776 13 -3,229 -9,541 Mar. 2,490 -50 24 125 177 1,825 -4,273 -5,847 Apr. 2,457 106 12 60 255 1,688 3 -3,293 -6,577 May 1,894 421 66 151 161 1,843 30 -3,019 -5,872 June 2,281 562 33 120 234 1,851 75 -3,507 -6,443 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 1,852 155 163 148 -2,460 -2,689 -3,173 -6,106 -4,940 -5,355 Oct. 2,565 484 44 226 227 1,476 126 -3,814 -6,090 Nov. Dec. 2,804 3,441 793 973 90 105 148 276 239 307 1,393 1,298 84 41 -4,469 -4,682 -8,186 -9,793 Jan. Feb. 3,102 2,436 540 1,619 114 120 254 263 162 184 1,051 1,162 18 17 -4,753 -5,262 -10,893 -10,769 583 68 239 13 p 1,314p 32p -5,022p -10,9 1973 -- 1974 -- Mar 1974 -- Feb *1,986 * 6 47 p 6 13 20 27 2,759 2,781 2,171 2,096 898 2,203 1,882 1,508 88 253 95 115 226 210 245 299 124 294 114 206 998 1,153 1,376 1,251 18 15 20 16 -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 *1,501 -1,538 1,097 848 * 520 * 154 114 14 71 73 298 286 167 204 118 116 80 147p 912 983 1,483 1,713p 19 19 34 4 4p -5,911 -5,858 -4,304 -4,402 -10,497 -11,388 -11,441 -11,298 3 *2,264 * 263 -11,2260 48 *2,120 * -4,078p 9 10 212 Apr 86 5 5p 97 306 p 1,503p 46 236p 1,195p 4 8p 41p -5,3 6p -11, 17 24 NOTE: Government security dealer trading positions are on a commitment basis. Trading positions, which exclude Treasury bills financed by repurcnase agreeOther security dealer positions are debt ments maturing in 16 days or more, are indicators of dealer holdings available for sale over the near-tert. issues still in syndicate, excluding trading positions. The basic reserve deficit is excess reserves less borrowing at Federal Reserve less net Federal funds purchases. Weekly data are daily averages for statement weeks, except for corporate and municipal issues in syndicate which are Friday figures. * STRICTLY CONFIDENTIAL ** Monthly averages for excess reserves and borrowingq are weighted averageq of statement week figures. 2p STRICTLY CONFIDENTIAL APRIL TABLE (FR) 12,1974 5 SELECTED INTEREST RATES Per cent Treasury Bills Period Federal Funds (1) 90-Day (2) 1-Year (3) Short-Term 90-119 Day Commercial paper (4) Long-Term CD's New Issue-NYC 60-89 Day (S) 90-119 Day (6) Aaa Utility New Recently Issue Offered (8) (7) Municipal Bond Buyer 9) U.S Government (10-yr Constant Maturity) (10) FNMA Auction Yields (11) 1973 -- High Low 10.84 5.61 8.95 5.15 8 43 5 42 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 1974 -- High Low 10 02 8.81 8.60 7.04 8.10 6.39 9.63 7.88 9.75 8.00 . 75 7.88 9 13 8.05 8.97 8.14 5.75 5.16 7.50 6.93 8.95 8 43 1973 -- Mar 7 09 6.09 6.53 6.76 6.78 6 75 7 49 7.51 5.29 6 71 7 78 Apr. May June 7 12 7 84 8.49 6.26 6.36 7.19 6.51 6.63 7.05 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 Tuly Aug Spt 10.40 10.50 10.78 8.01 8.67 8.29 7.97 8 32 8.07 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 7.22 7.83 7.45 7.17 7.40 7.01 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 -- Tan Feb Mar. 9 65 8 97 9 35 7.77 7.12 7.97 7.01 6.51 7.34 8 86 8.00 8.64 9.05 8.09 8.69 8 83 7.97 8.56 8 21 8 12 8.46 8 22 8.23 8.42 5.22 5.20 5.41 6.99 6.96 7.21 8.71 8.48 8.53 1974 -- Feb 6 13 20 27 9 13 8 93 9 07 8.81 7.16 7.08 7.04 7.20 6.59 6.47 6.39 6.54 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 8.25 8.24 8.29 5.16 5.18 5.21 5.26 6.94 6.93 6.96 7.01 6 13 20 27 8.98 9.03 9.33 9 61 7.60 7.81 7.93 8.22 6.91 7.02 7.26 7.83 8.15 8.33 8.58 9.10 8.25 8.38 8.75 9.38 8.13 8.25 8.63 9.25 8.37 8.33 8.59 8.64 8.27 8 37 8.52 8.67 5.27 5.32 5.46 5.57 7.08 7.12 7.28 7.38 8.44 -8.62 3 10 17 24 9.93 10.02 8.41 8.60 7.84 8.10 9.45 9 63 9.38 9 75 9.25 9.75 8.78 9 13p 8.75 8.92p 5.73 5.75 7.47 7 .50p 8.95 Mar Apr. 8.53 8.43 NOTES: Weekly data for columns 1 to 4 are statement week averages of daily data Columns 5 and 6 are one-day Wednesday quotes. For Columns 7, 8 and 10 the weekly date is the mid-point of the calendar week over which data are averaged. Column 9 is a one-day quote for Thursday following the end of the statement week. Column It gives FNMA auction data for the Monday preceding the end 6[ the statement week. The FNM atiction yield is the average yield in the bi-weekly auction for short-term forwird commitments for Government underwritten mortgages APPENDIX TABLE I RESERVES AND MONETARY VARIABLES RESERVES , Period Total (1) Honborrowed (2) MOEY STOCK 1MASURES Available to Support Pvt. Deposita (3) 3 (4) (5) (6) EANK CREDIT Adjusted Credit Proxy MEASURES Total Loans and Investments (7) April 12, 1974 (8) OTHER ITie Total Time (9) Other than CD's (10) Thrift Institution Deposits +6.0 +7.2 +10.6 +7.8 +9.3 +7.8 +7.7 +7.2 +8.7 +6.9 +10.1 +9.3 Semi-Annually: 1st Half 1972 2nd Half 1972 +10.8 +9.9 +11.0 +4.1 +8.3 +11.5 Ist Half 1973 2nd Half 1973 +6.7 +8.6 +1.6 +12.7 +10.3 +7.8 Quarterly: 1st Qtr. 1972 2nd Qtr. 1972 3rd Qtr. 1972 4th Qtr. 1972 +8.7 +12.6 +44.4 +15.1 +9.1 +12.6 -0.9 +9.2 +9.6 +6.9 +10.4 +12.2 1st 2nd 3rd 4th 1973 1973 1973 1973 +6.4 +6.9 +10.6 +6.1 -3.6 +7.0 +11.3 +13.4 +7.8 +12.5 +14.2 +1.4 lst Qtr. 1974 +1.7 +1.6 +6.2 +30.1 -21.1 +10.5 +14.7 +5.4 +0.5 +27.2 -5.1 +9.4 +12.1 -4.3 +10.5 +26.8 -38.5 +1.8 +20.1 +0.5 +0.2 +24.9 -13.5 +21.9 +26.7 -1.6 +14.4 +15.9 -2.9 +10.3 +10.0 +9.9 +17.3 +18.5 +10.1 +13.3 +1.0 -6.3 +9.4 +11.7 +9.1 +7.2 +8.6 +10.3 +11.9 +6.1 +4.1 +3.2 +9.1 +9.7 +8.5 +35.7 -24.8 -5.3 +45.9 -30.4 -9.8 +6.9 -0.3 +12.1 +7.0 +11.2 +8.7 Qtr. Qtr. qtr. Qtr. onthlv: 1973-Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. 1974--Jan. Feb. Mar. I/ p +10.7 +10.9 +7.7 +3.7 I Nondeposit Funds CD's (12) (11) (Per Cent Annual Rates of Growth) Annually: 1970 1971 1972 1973 I (13) (Dollar Change in U.S. Covt Dand (14) Billions) +8.2 +9.4 +11.6 +10.6 +8.1 +11.2 +14.6 +12.6 +17.9 +18.2 +15.7 +15.9 +11.1 +16.7 +13.5 +11.3 +7.1 +17.5 +16.9 +8.6 +11.2 +11.3 +13.6 +14.7 +15,4 +14.8 +13.8 +13.8 +17.3 +15.4 +13.8 +7.0 +16.6 +8.0 +20.7 +10.0 +10.3 +11.6 +11.7 +5.3 +18.6 + 0.8 +14.6 +10.9 +12.8 +11.8 +10.5 +11.6 +10.2 +12.1 +15.7 +11.1 +13.0 +15.8 +14.5 +15.7 +14.3 +14.8 +15.5 +11.7 +12.7 +11.4 +18.9 +14.7 +16.2 +13.9 +0.7 +3.7 +2.4 +3.6 -0.4 +0.3 -1.1 +1.2 +9.4 +10.4 +4.5 +9.2 +14.6 +12.6 +10.5 +3.3 +19.9 +12.7 +11.4 +4.4 +22.7 +17.8 +14.0 +5.8 + 9.9 +10.4 +10.4 +12.5 +13.6 +9.4 +3.1 +7.5 +11.2 +7.4 +4.7 -3.9 +1.5 -2.3 -0.3 -0.1 +16.2 +15.4 +12.1 +9.7 +11.1 +22.3 +15.4 +11.0 +11.1 +8.6 +17.0 +5.7 +1.6 +2.7 +5.6 +17.8 +23.7 +17.2 +13.1 +16.6 +8.2 +13.3 +16.7 +4.1 +6.7 +5.0 +1.5 +16.5 +22.3 +28.2 +22.5 +18.9 +11.2 +12.5 +19.2 + 9.8 + 3.4 + 3.3 +10.7 +12.9 + 7.0 + 9.6 +10.0 +10.3 +10.7 + 7.6 +13.0 +10.4 +16.1 +11.0 +10.1 +15.8 +14.4 +10.2 +9.4 +7.8 +10.8 +6.5 +12.5 +1.3 +11.9 +15.8 +15.0 +17.1 +21.5 +14.9 +9.3 +15.2 +13.8 +7.0 +8.2 +7.4 +8.8 +13.0 +12.5 +9.1 +10.0 +7.8 J+6.9 +9.0 +8.6 +1.2 -0.4 -1.2 -1.0 40.1 +8.2 +2.7 +6.4 +7.2 +8.6 1 +1.2 +1.8 44.9 + + + + + + + + + + -0.8 -0.4 -1.2 1.3 4.4 5.5 3.8 2.9 0.7 1.9 2.4 0.4 2.9 1.8 0.8 +0.6 -0.6 +1.5 -0.5 -1.9 +0.1 -1.4 +0.9 +0.2 +1.0 -0.2 -0.9 42.7 +1.1 +1.1 +1.3 -3.2 +0.7 Growth rates are based on estimated monthly average levels derived by averaging end of current month and end of previous month reported data. NOTE: Reserve Requirements on Eurodollar borrowings are included beginning October 16, 1969. and requirements on bank-related comerieal paper are included beginning October 1, 1970. p - Preliminary. April 12, 1974 Appendix Table II RESERVES ANDMONETARY VARIABLES (Seasonally adjusted, billions of dollars) RECaSFES I NonPernalm -. (1) oved bo (2) MONEIV STOV MA I. ........ Available to Support n,-..4,Iv p,. (3) ST-CK Tot Total Pvt. Nt. __. Dep,. 4I 29,193 31,299 31,410 28,861 31,173 30,360 27,099 28,965 29,053 MQEILXY: 1973--Jan. Feb. Mar. 32.199 31,634 31,910 31,037 30.040 30,085 29,439 29,368 29,621 256.7 257.9 258.1 199.6 200.4 200.1 Apr. May June 32,300 32,445 32,459 30,589 30,602 30,608 29,867 30,114 30,548 259.4 262.4 265.5 luly Aug. Sept. 33,576 33,906 34,173 31,622 31,741 32,321 31,358 32.038 32,394 Oct. Nov. Dec. 34,942 34,857 35,105 33,466 33,463 33,807 1974--Jan. Feb. Mar. 35,850 35,108 34,952 2 9 16 23 30 Feb. Mar. Apr. if ..... De ANDeALLY Dec. 1970 1971 Dee. Dec. 1972 WEEKLY: 1974--Jan. Samx RES - (7) . . RANi CIRJnTT.MNASURES C. ..RDT. . EASURES Total Adjusted Credit Sroxy Investmenca (9) (9) . VTHER Time Other Loans & Ilme Inan - Cuus (iL) i Thrift Institution 1 eoss n' Nan- U.S. Gov' t u ruma u (15) 641.2 726.9 822.4 332.9 364.3 406.4 203.9 237.9 269.9 216.1 253.9 296.9 25.3 33.0 43.4 6.5 6.1 6.1 529.6 532.3 534.6 830.4 836.7 841.7 409.7 413.5 421.2 272.8 274.4 276.6 300.8 304.4 307.0 44.7 49.1 54.6 6.7 6.1 7.6 200.8 203.4 206.2 538.3 543.6 549.4 847.7 855.0 863.5 426.6 430.5 434.5 278.9 281.3 283.8 309.4 311.4 314.2 58.4 61.1 62.0 7.1 5.2 5.3 266.4 266.2 265.4 207.0 206.4 205.2 552.0 554.9 556.6 867.9 870.9 873.2 437.6 443.8 285.6 445.9 288.7 291.2 315." 315." 316 b 66 .7 66(.7 3. 4.8 5.0) 32,845 32,714 32,912 266.5 268.8 270.4 206.1 207.9 208.8 561.6 566.7 570.7 879.8 886.9 893.2 446.5 447.5 449.6 295.1 297.8 300.3 318.3 320.2 322.5 63.8 62.0 62.8 6.0 5.8 4,9 34,799 33,916 33,638 32,799 32,791 33,122 269.6 272.5 274.9 207.8 210.0 211.7 573.7 580.1 584.3 898.4 906.8 913.4 454.3 454.8 459.3 304.1 307.6 309.4 324.7 326.7 329.1 65.5 66.6 67.7 6.2 3.0 3.7 35,312 35,752 36,521 35,747 35,628 34,102 34,976 35,533 34,565 34,408 32,921 32,747 33,075 32,488 32,875 270.3 269.5 270.0 268.9 268.4 208.8 207.8 208.2 206.9 206.5 572.6 572.0 573.7 573.7 573.7 452.5 453.1 454.0 302.2 302.5 303.7 304.8 305.3 64.3 64.8 64.7 65.8 67.1 6.0 6.8 6.5 6.2 5.5 6 13 20 27 35,199 35,167 35,277 34,865 34,201 34,014 33,901 33,614 32,641 32,739 32,795 32,921 270.9 271.8 274.6 272.3 208.5 209.3 211.9 209.8 577.3 579.1 582.6 581.2 455.5 454.5 453.7 454.8 306.4 307.2 308.0 308.8 66.8 67.0 66.4 66.2 4 5 2.5 1 5 3.1 6 13 20 27 p 34,663 34,792 35,233 34,781 33,751 33,809 33,750 33,068 33,134 32,937 33,214 33,090 275.8 274.8 274.5 274.3 212.7 211.6 211.3 211.0 584.7 583.9 584.0 583.9 458.2 456.4 459.3 460.3 308.9 309.0 309.6 65.9 66.8 67.1 68.8 4.2 3.0 4.0 3.6 35,475 33,972 33,319 276.0 212.6 586.1 466.4 310.1 71.2 4.8 3 p 453.5 454.5 309.5 Estimated monthly average levels derived by averaging end of durrent month and end of previous month reported data. p - Preliminary. NOTE: Reserve requirements on Eurodollar borrowings are included beginning October 16, 1969, and requirements on bank-related co ercial 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. Weekly data are not available for M3, total loans and investments and thrift institution deposits. Appendix Table III Growth Rate in Money Supply (Per cent change at an annual rate) M2 M, 1972 M Q 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 II 11.5 III -0.2 III 1973 IV 1974 N3 I 7.5 6.7 6.9 11.1 5.2 Q M 9.4 10.4 Q 10.7 9.1 4.5 7.2 10.1 9.2 7.3 9.5 9.0 8.8 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. Appendix Table IV Growth Rates in Money Supply for Alternatives (Per cent change at an annual rate) M_ M2 H 3M M Alt. 1974 II III II & III combined 7.1 6.4 6.7 M A 8.8 6.5 7.7 9.0 8.1 8.6 7.6 6.9 7.2 8.6 6.9 7.8 6.3 5.9 6.1 7.9 6.1 7.0 6.3 4.8 5.5 7.6 5.1 6.3 Alt. B 1974 II III II & III combined 6.5 5.7 6.1 8.5 5.8 7.2 Alt. C 1974 II III II & III combined 6.0 4.7 5.3 8.1 4.9 6.5 M = Annual rates of growth calculated from average levels in the final months of quarter. Q = Annual rates calculated from average levels in all three months of the quarters. 

Federal Reserve (1974, April 15). Bluebook. Bluebooks, Federal Reserve. https://whenthefedspeaks.com/doc/bluebook_19740416

@misc{wtfs_bluebook_19740416,
  author = {Federal Reserve},
  title = {Bluebook},
  year = {1974},
  month = {Apr},
  howpublished = {Bluebooks, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/bluebook_19740416},
  note = {Retrieved via When the Fed Speaks corpus}
}