Bluebook

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Content last modified 6/05/2009. (CONFIDENTIAL FR) January 17, 1975 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) January 17, 1975 MONETARY AGGREGATES AND MONEY MARKET CONDITIONS Recent Developments (1) M1 increased at an annual rate of about 2 per cent in December,and incoming data for early January suggest that its growth over the December-January target period will fall substantially below the lower end of the range of tolerance established by the FOMC at its December meeting. M2 expanded at only a 2 per cent annual rate in December, as inflows into bank time deposits other than money market CD's also slowed markedly. While such time deposit inflows appear to be improving in January, M2 expansion for the December-January target period also is expected to be well below the lower end of its tolerance range. The bank credit proxy expanded at a 7 per cent annual rate in December, as banks issued CD's aggressively, partly for window-dressing purposes. Since the turn of the year, banks have been much less active in the CD market. Growth of Monetary Aggregates and RPD's in December-January Period Reserve and Monetary Aggregates (Growth at SAAR in per cent) Range of Tolerance Latest Estimates M1 5-7 1.1 M2 7-10 4.5 9-11 4.7 RPD Memo: Federal funds rate (per cent per annum) Avg. for statement week ending 8.72 Dec. 18 1 7.35 Jan. 15 7.22 Jan. 1/ The range shown reflects the reduction in the lower limit from 7 per cent on January 9. -2(2) Following the December FOMC meeting, the Account Manager began aiming at a Federal funds rate of about 8¼ per cent. Despite large increases in nonborrowed reserves, the Federal funds market showed little tendency to ease, however, as member banks managed their reserve positions conservatively over the holiday and year-end statement date period. The relative abundance of reserves finally showed through in the money market on the final day of the year, so that the average funds rate for the statement week ending January 1 dropped to 7.35 per cent. In the following statement week, the Desk reduced its Federal funds rate target to about 7½ per cent, the lower limit of the Committee's tolerance range, in response to evidence of weakness in the aggregates. On January 9, with growth in the aggregates apparently well below the lower limits set by the FOMC, the Committee concurred in the Chairman's recommendation to reduce the lower limit of the funds rate range to 7-1/8 per cent. In the statement week ended this past Wednesday, the funds rate averaged 7.22 per cent, and the funds rate has drifted down further in recent days. (3) Interest rates on private short-term market instruments have generally declined 1 to 2 percentage points since the December meeting due to a combination of System policy actions and weaker private credit demands. The 3-month Treasury bill rate declined around centage point to about 6.30 per cent. per- On January 3, the discount rate was reduced by ½ point to 7¼ per cent by six Federal Reserve Banks. Because of the exceptionally heavy current and prospective corporate bond calendar as well as the prospect of large Treasury financings, -3yields in bond markets have not responded to the sharp decline in short-term rates, although the large volume of new corporate issues has been readily handled by the market. (4) Deposit inflows strengthened significantly further at nonbank thrift institutions in December. With mortgage demands remaining weak, these funds were used mainly to repay debt and build portfolio liquidity. Some institutions were also reported to have stepped up their acquisition of mortgages from mortgage companies and to have increased their purchases of GNMA guaranteed mortgage-backed securities. Mortgage rates have declined somewhat further in recent weeks. (5) The table on the following page shows (in percentage annual rates of change) selected monetary and financial flows over various recent time periods. Appendix table IV 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 V for the three alternatives presented in the next section. Average of Three Calendar Years 1971 Past Twelve Months Dec. '74 Past Six Months Dec. '74 Past Three Months Dec. '74 -- over over over 1973 Dec. '73 June '74 Sept.'74 Nov.'74 Total reserves 8.6 8.6 6.3 4.4 16.4 Nonborrowed reserves 7.7 10.6 20.4 34.7 34.6 8.8 8.9 5.2 1.2 7.7 7.0 4.5 2.8 4.0 2.1 M2 (M1 plus time deposits at commercial banks other than large CD's) 10.4 7.3 5.7 6.8 2.5 M3 (M2 plus deposits at thrift institutions) 11.7 6.6 5.4 6.8 4.8 (bank credit proxy adj.) 10.4 10.1 5.4 4.1 7.3 Loans and investments of commercial banks 2/ 12.8 8.3 1.4 -2.8 Large CD's 1.1 2.2 1.5 1.8 Nonbank commercial paper -- .6 .3 Past Month Dec.'74 over Reserves available to support private nonbank deposits Concepts of Money M1 (currency plus demand deposits) 1/ Bank Credit Total member bank deposits -12.8 Short-term Market Paper (Monthly average change in billions) 1/ .4 4.8 - .6 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 average of daily figures, except for data on total loans and investments of commercial banks, commercial paper, and thrift institu- tions--which are derived from either end-of-month or last Wednesday-of-month 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. -5Prospective developments (6) Three alternative sets of specifications are summarized below for Committee consideration, with more detailed data shown in the table on p. Alt. A Alt. B Alt. C Ranges of tolerance for Jan.-Feb. 4-6 M2 8-10 RPD 74-94 Federal funds rate (inter-meeting range) Longerrun growth rates 34-5k 3-5 7-9 6k-81 64t-8k 5-7 7t 7% 8% 7 7k 7% 5-6t 1/ M June '74-June '75 Nov. '74-June '75 Dec. '74-June '75 M2 June '74-June '75 Nov. '74-June '75 Dec. '74-June '75 1/ 74 8k 9k Figures shown assume staff GNP projection for first and second quarters of 1975, and Federal funds rate behavior as described in the paragraphs below. (7) The format of the summary table has been modified to provide additional perspective on longer-run growth rates of key monetary aggregates. The bottom half of the table shows growth rates for M1 and M2 for periods 5aAlternative Longer-Run Growth Rates for Key Monetary Aggregates M M Alt. A Alt. B Alt. C Alt. A Alt. B Alt. C 1974 Dec. 283.6 283.6 283.6 613.8 613.8 613.8 1975 Jan. Feb. Mar. June 283.8 285.9 287.7 293.2 283.7 283.6 285.5 287.0 290.9 617.6 617.3 622.1 626.6 640.5 617.1 621.5 625.4 637.6 285.7 287.3 292.2 622.9 627.8 642.0 Growth Rates Nov.'74--June '75 5.5 4.7 8.3 1975 1st Q. 2nd Q. 5.2 6.8 4.8 5.4 9.1 9.0 1975 Jan. Feb. 0.4 8.4 8.0 7.4 10.3 Alt. A M3 Alt. B Alt. Alt. A C Credit Proxy Alt. B Alt. C 1974 Dec. 954.8 954.8 954.8 494.1 494.1 494.1 1975 Jan. Feb. Mar. June 961.6 970.4 978.9 1003.9 961.1 960.8 968.3 975.3 996.7 497.9 499.5 502.5 511.4 497.6 498.9 501.8 510.7 497.4 498.4 501.1 509.5 969.2 977.0 1000.8 Growth Rates Nov.'74--June '75 9.5 9.0 8.2 7.1 6.8 6.4 1975 1st Q. 2nd Q. 10.1 10.2 9.3 9.7 8.6 8.8 6.8 7.1 6.2 7.1 5.7 6.7 1975 Jan. Feb. 8.5 11.0 7.9 10.1 7.5 9.4 9.2 3.9 8.5 3.1 8.0 2.4 -6of time varying from 6 months to a year, with all periods ending in mid-1975. These longer-run growth rates assume the staff GNP projection and further assume that the funds rate reaches levels at about the mid-point of the ranges shown over the next several weeks. For alternative A, however, it should be noted that the lower interest rates are not assumed to persist throughout the whole first half of the year, as will be explained below. (8) Alternative A encompasses the 6 per cent longer-run annual rate of growth for M1 (over the seven-month November '74-June '75 period) that was preferred by the Committee at its last meeting, the achievement of which would now require a 6¾ per cent growth rate over the first half of this year. Under this alternative the funds rate would be expected to decline to 6 per cent, or a shade below, between now and mid-February. Growth in M 1 by February would be expected to be considerably higher than in recent months, partly in lagged reaction to earlier interest rate declines, and partly because the behavior of money appears to have been unusually weak recently relative to nominal GNP. Given the very low growth that seems in store for January, however, the M1 growth rate would be expected to be in a 4-6 per cent range for the two-month January-February period. (9) Interest rate declines under alternative A may begin to be reversed as spring progresses. The rate of growth in M1 by the second quarter is expected to be relatively rapid as the impact of monetary ease cumulates, and growth would tend to accelerate further in the third quarter, given the substantial jump in the rate of increase in nominal GNP forecast by the staff, partly because a greater fiscal stimulus is now assumed, as explained in the green book. Assuming the Committee were to wish to hold monetary growth to around a 6-7 per cent annual rate in -7the second half of the year, this would appear to require an upward adjustment of the funds rate, as well as other short-term market interest rates, at a fairly early stage. (10) The specifications of alternative B contemplate a smaller decline in the Federal funds rate over the next few weeks than under alternative A. cent. The mid-point of the suggested range is around 6¾ per Money supply growth over the first half of 1975 would be expected to be at about a 6 per cent annual rate, and would be at about a 5½ per cent annual rate of growth over the Nov. '74--June '75 period. Because alternative B puts in place a lesser degree of monetary stimulation over the near-term, it would appear that any reversal of the interest rate decline would be delayed more than under alternative A. In order to prevent an acceleration of monetary growth in the second half of 1975, the funds rate under this alternative would probably not need to rise until perhaps early summer. However, market interest rates more generally could begin rising in spring in anticipation of continued exceptionally large Treasury cash needs in the second half of the year combined with a pick-up of total private credit demands (assuming that an economic recovery in the second half is still anticipated at that time). (11) by a Federal Alternative C assumes money market conditions as indexed funds rate centering around 7¼ per cent. M1 growth in the January-February period under this alternative would be expected to be in a 3-5 per cent annual rate range. A pick-up in M1 growth would still be anticipated in February, but the rate of expansion would be less than under the two other alternatives. Similarly, over the -8longer-run, growth rates for money supply would be slower; for example, over the first half of 1975 M 1 growth might be at around a 5¼ per cent annual rate. Given prevailing market expectations of a further easing (12) in monetary policy, a Federal funds rate of around 7¼ per cent is likely to be accompanied by some back-up in market interest rates in the nearterm, particularly rates on Treasury securities and corporate bonds. Over the next few weeks, the Treasury will likely be raising new cash by adding $200-$300 million to the weekly bill auctions; in addition $1 -$2 billion of new cash will probably be raised in connection with the refunding of $3 billion of publicly-held debt that matures in mid-February. or 23. Terms of this refunding will be announced on January 22 The Treasury will also be raising large amounts of new cash in March and April. Given the prospective volume of Treasury issues to be distributed through the market, dealers may be reluctant to add significantly further to holdings unless they can foresee some drop in their financing costs. On the other hand--aside from a very heavy volume of corporate bond issues--credit demands in other sectors of the market are likely to be quite modest in the weeks ahead. Demands may be particularly light in private short-term markets so that interest rate pressures, should they develop, are more likely to appear in longer-term market sectors. (13) The net inflow at banks of time and savings deposits (other than money market CD's) is expected to continue at about the pace of the fourth quarter of 1974 under alternative C. Greater -9inflows of consumer-type time and savings deposits are assumed under alternatives A and B in the months immediately ahead, but under alternative A the rate of inflow is assumed to drop back somewhat in the spring as interest rates begin to rise. Under all three alternatives, the staff has assumed that savings inflows will be sustained in late spring or early summer by initial payments of the proposed income tax rebate--which would also tend temporarily to enlarge demand deposits. Implied rates of growth for M2 under the three alternatives are shown in the bottom panel of the summary table in paragraph (6). (14) Similar assumptions to those for consumer-type time deposits at banks were made for deposit flows at thrift institutions. Given the apparently weak mortgage demand, downward pressures on mortgage interest rates might be expected in the months ahead under all three alternatives, with declines in mortgage rates the largest, of course, under alternative A. Under the easing alternatives, conditions leading to a reversal of such rate declines would tend to develop as time passes, though perhaps not until after mid-year. (15) Bank credit expansion will probably be generally moderate over the months ahead under any of the alternatives. This is mainly because business and consumer credit demands on banks are expected to be quite sluggish, as businesses reduce inventories and consumers continue to hold off on purchases of durable goods. In addition, given their need to improve liquidity positions, uncertainties as to the quality of their loan portfolio, and their weak capital positions, banks are unlikely to be -10aggressive issuers of CD's over the months ahead. Money center banks in particular may be cautious in adding to their security portfolios and relaxing lending terms. Nevertheless, the banking system as a whole may make sizable investments in short-term U.S. and state and local government securities, utilizing available funds from consumer-type time and savings deposits and demand deposits. -11Proposed directive (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. For all three alternatives, it is proposed to include a reference to Treasury financing because the regular mid-February financing will be announced shortly. Alternative A To implement this policy, while taking account of THE FORTHCOMING TREASURY FINANCING AND OF developments in domestic and international financial markets, the Committee seeks to achieve bank reserve and money market conditions consistent with [DEL: somewhat]more rapid growth in monetary aggregates over the months ahead than has occurred in recent months. Alternative B To implement this policy, while taking account of THE FORTHCOMING TREASURY FINANCING AND OF developments in domestic and international financial markets, the Committee seeks to achieve bank reserve and money market conditions consistent with somewhat more rapid growth in monetary aggregates over the months ahead than has occurred in recent months. -12Alternative C To implement this policy, while taking account of THE FORTHCOMING TREASURY FINANCING AND OF developments in domestic and international financial markets, the Committee seeks to achieve bank reserve and money market conditions consistent with [DEL: somewhat more rapid]MODERATE growth in monetary than has occurred in recent aggregates over the months ahead [DEL: months]. CHART 1 STRICTLY CONFIDENTIAL(FR) 1/17/75 RESERVES AVAILABLE TO SUPPORT PRIVATE NONBANK DEPOSITS BILLIONS OF DOLLARS 40 30 S 1973 DM J 1974 S D M 1975 Break in Series, Actual Level of RPD After Changes in Reserve Requirements I I 0 N 1974 I D I J F 1975 't CHART 2 STRICTLY CONFIDENTIAL(FR) 1/17/75 MONETARY AGGREGATES NARROW MONEY SUPPLY M1 BILLIONSOF DOLLARS -295 -290 7% growth for Dec -Jan -285 growth ,5% BROADER MONEY SUPPLY M2 (1/15/75) 280 I I I 1275 i 10% growth for Dec 7 - 620 2% growth (1/15/75) 615 615 610 605 I 1973 1974 0 i N 1974 I D F J 1975 CHART 3 STRICTLY CONFIDENTIAL(FR) 1/17/75 MONETARY AGGREGATES ADJUSTED CREDIT PROXY BILLIONS OF DOLLARS 520 -500 - 480 480 440 BILLIONS OF TOTAL 1973 1974 *Break in series, Actual Level of Total Reserves After Changes in Reserve Requirements 1975 1/17/75 CHART 4 RATES RATES INTEREST AND AND MARKET MARKET CONDITIONS CONDITIONS INTEREST INTEREST RATES PER CEN IT 12 Short-term PERCENT - - INTEREST RATES Long-term 11 WEEKLY AVERAGES 0 PERCENT 13 WEEKLY FHA MORTGAGES EURO-DOLLARS 3-MONTH FNMA MONDAY AUCTION 11 - - 9 - 8 - Aa a UTILITY NEW ISSUE 9 \ - 7 8 GOVERNMENT BONDS 10-YEAR AVERAGES ts 3 7 TREASURY BILLS 3 MONTH 5 MUNICIPAL BOND BUYER THURSDAYS PRIME COMMERCIAL PAPER 4 6 MONTH 3 197I 3l l 1973 l l 111 1974 I i l 1 5 1 1 1 1I 1 1 11 1973 11 I 1974 1 3 TABLE STRICTLY CONFIDENTIAL 1 JANUARY 17, BANK RESERVES (ACTUAL AND CURRENT PROJECTIONS) ----- - ----- ----------- ----------- ----------AVAILABLE---------FOR------------1I P----------V SEAS ADJ (1) MONTHLY LEVELS-tMILLIONSI - --------"-"--- -- -1974--0CT. NOV. I DEC. I ANNUAL RATES OF CHANGE ------- ----------- &#45;&#45;&#45; -- -REQUIRED RESERVES I SEASONALLY ADJUSTED I----------------------------OTHER PRIVATE ITOTAL NONBORROWED I TIME DEIP DEMAND RESERVES I RESERVFS SEAS ADJ IS-NON NON SEAS ADJ '------ ------- ----------- --------------------------'--- -------(6) (3) 14) I (2) I (5) CD'S AND NON DEP GOV'T AND INTERBANK ------- ------'----(7) (8) 5,224 4,967 4,761 1,967 2,008 2,247 S4,986) ( 2518) 11 II I 34,889 34,875 34,680 34,823 34,882 34,896 I 1975--JAN. ----------- I---------------------------------------------------------------------- RESERVE:S AVAILABLE FOR PRIVATE NONBANK DFPOSITS PERIOD ---------- AGGREGATE RESERVES 1975 V 36,8>;7 36,883 36,927 3!5,043 355,631 3<6,199 20,409 20,496 20,587 (37,016) (3< 6,584) (20,328) 9,130 9,200 9,073 11I (35,526) (34,498) II II ( 9,003) I I -------- QUARTERLY: 1974--1ST 2ND 3RD 4TH QTR. OTR. OTR. OTR. I I MONTHLY: 1974--OCT. NOV. DEC. -2.7 7.7 DEC.-JAN. WEEKLY LEVELS-$MILLIONS - - - - - - -- ------- DEC. JAN. 4 11 18 25 I I V I V 1.6)1 34,3-2.7 34,277 4.7) 19.1 34,858 -1.3 34,991 34,415 34,584 34,711 34,858 34,376 34,277 1 8 15 V1 I 35,515 V II II 11 V I I I 35,515 35,118 35,536 V 8.3 5.9 -16.6 -89.1 -59.0 -49.8 ( 10.9) 20.8) -10.9) ( 13.7) 28.0) 1.1) 34.6 I I -9.3) -12.8) 56.7) 2.3) I) II I! 34,093 VI i3,093 34,290 IV 34,290 34,748 34,748 R1 35,007 II II I 4.8 2.8 13.2 49.6 17.9 I 35118 3,536 42.4 116.7 25.9 -62.5 -1.8 -1.3 16.4 I II II V 9.1 9.6 11.1 -0.8 1.2 0.8 5.6 34.7 -1.3 1975--JAN. - 9.1 1.2 0.4 2.2 0.1 7.0 1.3 20.1 8.2 4.4 II II I 366,197 37,269 36,564 36,816 36,842 3!5,017 3'5,995 3(6,180 37,352 36,677 37,117 3(6,791 3 6,365 3 6,i09 20,550 20,510 20,818 20,596 9,231 9,258 8,965 8,991 4,856 4,815 4,641 4,727 2,278 2,148 2,232 2,131 20,420 20,265 20,368 8,974 8,996 8,952 4,814 4,937 4,994 2,494 2,301 2,840 VI NOTE: DATA SHOWN IN PARFNTHEcES ARE CURRENT PROJECTIONS. AT THE FOMC MEETING OF DEC. 17, 1974 THE COMMITTEE AGREED ON A RPO RANGE OF 9.0 TO 11.0 PERCENT FOR THE DECEMBER-JANUARY PERIOD. ------------------------------------------------ ------------------------------ --------- -------------- STRICTLY CONFIDENTIAL MONETARY AGGREGATES (ACTUAL AND CURRENT PROJECTIONS, SEASONALLY ADJUSTED) JANUARY 17, I MONEY SUPPLY NARROW f BROAD (Ml) I (M2) ( I PERIOD TABLE 2 (1) I I I II ADJUSTED CRFDIT PROXY I1 (3) II (2) II U.S. I GOVT. I DEPOSITS I TIME AND SAVINGS DEPOSITS I OTHER I TOTAL I THAN CD S I CD S I I NONDEPOSIT I SOURCES OF I FUNDS (7) (8) 326.1 329.3 330.2 86.2 85.5 90.3 7.9 7.6 8.4 (426.8) (333.5) (93.3) 15.1 21.3 9.2 12.6 12.8 8.6 7.3 9.2 13.8 7.6 15.9 12.3 11.8 3.3 (18.3) (12.0) (17.2) ( 7.7) (4) (5) 3.7 4.6 1.8 412.3 414.9 420.4 S1.2) (6) II MONTHLY LEVELS-$BILLTONSI -----------------------I 1974--0CT. NOV. DEC. 1975--JAN. 281.7 2P3.1 283.6 607.8 612.5 613.8 488.3 (283.6) 1617.1) (497.4) 491.1 494.1 II II 1 II II ( 7.8) PERCENT ANNUAL GROWTH I -------------------- II II QUARTERLY 1974--1ST 2ND 3RD 4TH QTR. OTR. OTR. QTR. 5.5 6.5 1.6 4.0 8.2 9.3 7.7 4.6 6.8 1 6.6 4.1 II II II II MONTHLY 1974--OCT. NOV. DEC. 3.8 6.0 2.1 1975--JAN. DFC.-JAN. WEEKLY LEVELS-SBILLIONS - ------------------DEC. JAN. 4 11 18 25 -- 8.3 9.3 2.5 4.9 7.3 ( 0.0) ( 6.5) S8.0) I 1.1) ( 4.5) (7.7) I I 1 8 P 15 PEI I 286.0 284.3 283.4 282.8 283.6 281.5 282.7 I II II lI II I II II II 93.6 93.5 I I3 II II I3 614.9 614.3 613.5 613.8 493.5 494.6 49r.7 493.1 ! II II II II 3.5 3.2 0.1 415.5 418.5 420.3 422.7 328.9 330.0 330.1 331.0 614.0 613.7 616.1 494.5 495.4 497.9 II 0.0 0.0 2.5 423.5 425.7 426.8 330.4 332.1 333.4 I If 1 86.7 88.5 90.2 91.7 7.6 8.1 8.9 8.6 93.1 8.2 8.1 7.4 I li ------------------------------------------------------------- ------------ NOTE: ------------------------------- II 20.4 DATA SHOWN TN PARENTHESES - ARE CURRENT - PROJECTIONS. -------------------- P PE -------- PRELIMINARY PAPTIALLY ESTIMATED -------- 1975 Open Market Operations 1/ Bills Coupon Agency RP's & Accept. Issues Issues Net 3/ (1) (2) (3) TABLE 3 STRICTLY CONFIDENTIAL (FR) RESERVE EFFECTS OF OPEN MARKET OPERATIONS AND OTHER RESERVE FACTORS (Millions of dollars, not seasonally adjusted) JAlUARY 17, 1975 Daily Average Reserve Effects 2/ Open Market A Member Other 4/ Operations Bank Borrowing Factors Total (4) 4 in reserve categories req. res. against available res. 5/ UI.S.G. and interb (6)+(7)+(8)-(9) A Target available reserves 5/ (5) (6) (7) (8) (9) (10) (11) -400 221 275 375 Monthly 1974--June -544 176 237 -984 -1,115 -673 420 74 July 898 125 726 -3,760 -2,011 1,601 309 -901 465 544 Aug. 862 -- 235 2,225 3,322 141 39 -464 -450 166 180 Sept. -594 176 191 549 322 -32 -60 99 -67 74 375 -- -243 -1,970 -633 -1,494 1,990 177 -314 315 981 2,739 327 -507 201 -132 153 395 976 393 2,963 -583 -2,376 - 12 16 450 965 134** -1,341** 1,675 1,388 -511 -29 269 114 469 912 -1,664 -1,845 175 -145 238 -203 -83 -311 - 42 -140 Oct. -1,727 - Nov. 1,217 212 331 Dec. 729 280 360 - 131* -131* -212 --331 -- 953 -3,101 1,485 3,088 1,077** -3,607** 2,652 3,550 1975--Jan. Feb. Weekly 1974--Nov. 6 13 20 27 -7 -374 835 251 Dec. 4 11 554 56 - -- -5,269 3,987 -4,715 4,043 532 -243 -409 -425 459p - 91P 132p 44p 450p 8 - 03p 18 25 313 399 -280 360 -- 1,091 757 1,764 1,436 432 2,612 174 -159 -137p -2,390p lip -196p 458p 259P 1 8 15 -30_ -371 - -14 - -3,323 -3,069 2,492 -3,409 -3,393 2,526 103 -1,918 -863 -101 -249 296 1975--Jan 406 22 29 1,041p 8 1, 51p 1,444p 1/ Represents change in System's portfolio from end-of-period to end-of-period; includes redemptions in regular bill 21 Represents change in daily average level for preceding period. 3/ Includes matched sale-purchase transactions as well as RP's. 4/ Sum of changes in vault cash, currency in circulation, Treasury operations, F.R. float, gold and foreign accounts, 5/ Reserves to support private nonbank deposits. Target change for Dec. and Jan. reflects the target adopted at the Target change for previous months reflects the bluebook patterns that are consistent with target ranges that were Special certificate. (Direct Treasury borrowing from F.R.). ** Reflects special certificate purchase. 329P 81p 458p 508p 7 -39 p 4 19p auctions. and other F.R. accounts. Dec. 17, 1974 FOMC meeting. adopted during the month. STRICTLY CONFIDENTIAL JANUARY 17, TABLE (FR) 1975 4 SECURITY DEALER POSITIONS AND BANK POSITIONS Millions of dollars U.S. Govt. Security Dealer Positions Period Bills Dealer Positions Corporate Municipal Bonds Bonds (3) Coupon Issues (7) (1) Excess** Reserves Member Bank Reserve Positions I Borrowing at FRB** Total Seasonal (6) (7) Basic Reserve Deficit 8 New York 38 Others (91 (8) 3,796 897 1,299 -301 197 0 2,561 688 163 3 -5,243 -1,831 -10,661 3,678 -289 2,203 -309 253 0 3,906 647 176 13 -7,870 -2,447 -12,876 1973 -- Dec. 3,441 973 105 1,298 41 -4,682 - 9,793 1974 -- Jan. Feb. Mar. 3,102 2,436 1,986 540 1,619 583 114 120 68 1,051 1,167 1,314 18 17 32 -4,753 -5,262 -5,030 -10,893 -10,769 -11,058 Apr. May June 1,435 408 580 99 85 9 39 142 66 1,736 2,590 3,020 40 102 134 -3,952 -3,171 -4,445 -11,603 July Aug. Sept. 457 1,758 2,309 -214 398 552 14 33 23 162 197 180 3,075 3,337 3,282 149 164 139 -3,522 -4,231 -4,235 - 9,555 - 9,224 - 8,250 2,174 2,900 *2,985 654 1,608 *1,836 25 83 175 197 308p 253p 1,813 1,253p 728p 117 67 32p -4,602 -6,322 -5,960 - 8,689 - 9,715 2,518 2,962 2,327 3,553 534 1,919 1,903 1,709 323 144 27 310 1,125 1,097 1,479 -5,015 -7,688 -6,802 -5,795 - 8,976 13 20 27 4 11 18 25 2,975 2,965 3,678 *2,942 1,630 1,678 1,714 *1,680 355p -168p 160p 39 7 p 1,072p 647p 821p 662p -5,400 -7,245 -6,704 -5,243 - 9,889 1 *2,234 *2,487 *3,351 *2,507 *2,845 650 -4,771 - 9,016 1973 -- High Low 1974 -- High Low Oct. Nov. Dec. 1974 -- Nov. Dec. 1975 - -Jan. 6 8 15 22 29 1 NOTE: 561p 312p 608p p 180p -37p *2,036 -' 1,367 L' ' " ' 44 -5,3 p -5,670p - - 4,048 - 6,046 - 9,091 - 9,920 -10,169 -10,046 -10,040 - 9,871 -10,614 -10,164p -10,881p -10,164p -10,881p - Government security dealer trading positions are on a commitment basis. Trading positions, which exclude Treasury bills financed by repurchase agreements maturing in 16 days or more, are indicators of dealer holdings available for sale over the near-term. Other security dealer positions are debt 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 borrowings are weighted averages of statement week figures. STRICTLY CONFIDENTIAL (FR) JANUARY 17, 1975 TABLE 5 SELECTED INTEREST RATES Per cent Short-Term Treasury Bills Period Federal Funds (1) 90-Day (2) 1-year _Long-Term CD's New Issue-NYC 90-119 Day Commercial Paper 60-89 Day 90-119 Day Aaa Utility New Recently Issue Offered 1973--High Low 10.84 5.61 8.95 5.15 (3) 8.43 5.42 1974--High Low 13.55 8.45 9 63 6.53 9.54 6.39 12.25 7.88 12.25 8.00 12.00 7.88 10.61 1973--Dec. 9.95 7.45 7.01 9.28 9.44 1974--Jan. 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 Apr. May 8.33 8.23 7.90 8.08 June 10.51 11.31 11.93 July Aug. Sept. 12.92 12.01 11.34 7.55 8.96 8.06 8.04 Oct. Nov. Dec. 10.06 9.45 8.53 7.46 7.47 27 9.63 9.37 9.34 9.46 J 1974 - .Nv. 6 13 20 Dec. 1975-- Jan. 10.50 5.38 (6) 10.75 5.50 (8) U.S. Government (10-yr. Constant Maturity) FNMA Auction Yields 8.30 7.26 (9) 5.59 4.99 (10) 7.54 6.42 (11) 9.37 7.69 8.05 10.52 8.14 7.15 5.16 8.14 6.93 10.59 8.43 9.13 8.00 8.04 5.12 6.74 8.78 9.05 8.09 8.69 8.83 7.97 8.56 8.21 8.12 8.46 8.21 8.23 8.44 5.22 5.20 5.41 6.99 6.96 7.21 8.71 8.48 8.53 9.92 10.82 11.18 9.81 10.83 11.06 9.78 10.90 10.88 8.99 9.24 9.38 8.95 9.13 9.40 5.73 6.02 6.13 7.51 7.58 7.54 9.07 9.41 9.54 8.52 11.93 11.79 11.36 11.83 11.69 11.19 11.83 11.91 11.38 10.20 10.07 10.38 10.04 10.19 10.30 6.68 6.69 6.76 7.81 8.04 8.04 9.84 10.25 10.58 9.55 8.95 9.18 9.35 9.33 8.72 8.84 10.16 9.21 9.53 10.23 9.34 7.15 7.59 7.29 6.79 9.56 6.57 6.61 7.05 7.90 7.68 7.40 10.22 9.87 9. 53 7.76 7.43 7.38 7.45 7.46 7.37 7.20 7.23 9.00 9.00 8.88 8.93 8.88 8.88 8.63 8.50 8.88 9.00 9.28 9.17 9.29 9.38 6.66 6.55 6.53 6.71 7.76 7.72 7.61 7.63 9.93 8.75 8.50 9.00 7.20 6.95 6.63 6.61 9.22 9.00 9.13 9.25 9.25 8.88 8.88 9.00 9.13 8.75 8.75 8.75 9.50 9.59 9.51 9.39 9.57 9.59 9.64 6.89 7.15 7.08 7.08 7.61 7.37 7.24 7.37 6.69 6.56 6.44 9.34 9.00 7.88 7.25 9.00 7.75 7.38 9.67 9.45 6 9.5 p 7.08 6.99 6.90 7.37 7.32 7.35p 4 9.02 11 18 25 8.86 8.72 8.45 7.45 7.28 7.08 6.99 1 7.35 7.70 7.22 7.02 6.68 6.63 8 15 (5) (4) 10.50 5.63 Municipal Bond Buyer 8.21 8.16 8.88 8.43 7.73 8.78 9.00 (7) 8.52 7.29 8.87 9.17 9.68 9.62 9.37p 9.81 22 29 Daily-- Jan. 9 7.27 6.55 6.38 7.75 7.28 16 -7,00p I I I II 6.49 6.44 1 7.50 nla. I NOTE: 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 11 gives FNMA auction data for the Monday preceding the end of the statement week. The FNMA auction yield is the average yield in bi-weekly auction for short-term forward commitments for Government underwritten mortgages. ~---- Appendix Table 1 RESERVES AND MONETARY VARIABLES RESERVES MONEY STOCK BANK CREDIT MEASURES MEASURES Available to Period Total Support Non borrowed Private M1 M2 M3 Adjusted Total Loans Credit Proxy and Invest- 1 2 3 4 6 7 5 (Per cent annual rates of growth) 1975 OTHER Total Time ments Deposits January 16, T e Time Tr Thrift Other Than Insttution CD's Deposits 8 9 10 11 Ds C Non- U.S. deposit Funds Gov't. Demand 13 14 12 (Dollar change in billions) Annually: 1972 10.6 7.7 10.0 8.7 11.1 13.1 11.3 14.6 15.7 13.5 16.7 10.4 -0.6 -0.2 1973 1974 7.8 8.6 7.2 10.6 9.3 8.9 6.1 4.5 8.8 7.3 8.8 6.6 10.4 10.1 13.5 8.3 16.2 15.3 11.4 9.8 8.6 5.6 19.9 26.5 2.3 1.8 -1.7 -2.1 Semi-annually: 1st Half 1973 6.4 1.4 9.8 7.4 9.1 9.6 13.5 16.6 19.8 10.6 10.5 16.7 0.7 0.8 2nd Half 1973 8.9 13.1 7.8 4.7 8.3 7.6 6.8 9.6 11.4 11.6 6.4 3.2 1.6 -2.5 1st Half 1974 2nd Half 1974 10.6 6.3 1.0 20.4 12.4 5.2 6.0 2.8 8.6 5.7 7.6 5.4 14.5 5.4 15.0 1.4 18.6 11.0 10.8 8.3 5.9 5.0 17.5 9.0 1.8 -- 1.4 -3.5 Quarterly: 1st Qtr. 1974 2nd Qtr. 1974 3rd Qtr. 1974 1.3 20.1 8.2 1.2 0.8 5.6 5.7 19.1 9.1 5.5 6.5 1.6 9.3 7.7 4.6 8.8 6.4 4.0 8.2 20.4 6.6 17.5 12.0 5.6 15.1 21.3 9.2 12.8 8.6 7.3 7.9 3.9 3.1 4.2 13.3 3.5 0.9 0.9 0.2 -0.7 2.1 1.0 4th Qtr. 1974 4.4 34.7 1.2 4.0 6.8 6.8 4.1 -2.8 12.6 9.2 6.9 5.5 -0.2 -4.5 32.6 -23.6 42.6 -29.2 5.9 2.9 -2.7 9.7 6.9 11.1 7.2 9.3 12.3 2.9 16.5 17.0 21.4 15.8 15.6 12.2 7.8 6.3 2.6 1.8 -0.1 0.4 1.2 -2.9 Mar." Apr. -4.7 31.1 -9.2 17.2 8.2 19.1 9.2 6.1 9.7 8.0 9.5 7.3 9.2 29.6 18.4 17.9 7.7 26.6 10.1 9.3 9.5 5.8 -0.2 5.9 0.6 0.6 1.0 1.4 May 21.2 -7.7 21.5 4.3 4.3 3.3 16.9 12.1 18.0 5.0 1.4 4.6 0.7 1.0 June July Aug. Sept. Oct. Nov. p Dec. p 7.1 21.7 -4.3 7.1 -1.8 -1.3 16.4 -7.1 13.1 -5.9 9.7 49.6 17.9 34.6 15.7 8.6 10.8 7.8 -1.3 -2.7 7.7 9.1 2.1 1.3 1.3 3.8 6.0 2.1 10.5 5.4 5.2 3.2 8.3 9.3 2.5 8.5 5.0 4.1 2.9 6.9 8.5 4.8 13.6 9.2 6.4 3.9 -4.9 7.3 5.7 16.0 9.4 -8.6 -4.5 -12.8 18.0 13.3 7.4 6.8 13.8 7.6 15.9 11.5 8.3 8.6 4.9 12.3 11.8 3.3 4.3 4.7 1.8 2.9 4.7 6.8 9.2 2.8 2.3 0.2 1.0 1.4 -0.7 4.8 -0.4 0.8 -0.2 -0.4 -0.7 -0.3 0.8 -0.3 -1.1 2.0 0.1 -2.6 0.9 -2.8 Monthly: 1974--Jan. Feb. NOTES: Reserve requirements on Eurodollar borrowings are included beginning October 16, 1969, and requirements on bank-related commercial paper are included beginning October 1, 1970. 1/ Growth rates are based on estimated monthly average levels derived by averaging end of current month and end of previous month reported data. p - Preliminary. FR 712-S Appendix Table 2 January 16, 1975 RESERVES AND MONETARY VARIABLES SEASONALLY ADJUSTED, BILLIONS OF DOLLARS Period Total 1 Available to Nonborrowed Support Pvt Deposits 2 BANK CREDIT EASNRET MEASURES MONEY STOCK MEASURES RESERVES 3 1 Total Pvt. Dep. 4 5 M2 6 M3 7 Ad Credit Proxy Total Loans and Investments 8 9 OTHER Total Time Time Other Than CD's Thrift Institution Deposits CD's N deposit Funds U.S. Gov't. Demand 10 11 12 13 14 15 Annua Ily: Dec. 1972 Dec. 1973 31,456 35,164 30,406 33,867 29,092 32,965 255.8 271.5 198.9 209.9 525.7 572.2 823.2 895.3 406.4 448.7 559.0 634.6 313.8 364.5 269.9 300.7 297.5 323.1 43.9 63.8 4.3 6.6 5.6 3.9 Monthly: 1974--Jan. Feb. Mar. 35,820 35,115 34,978 34,769 33,924 33,664 32,824 32,904 33,130 270.9 273.1 275.2 208.9 210.4 211.9 575.5 580.8 585.5 900.7 907.7 914.9 453.3 454.4 457.9 643.3 652.4 662.4 371.0 375.9 378.3 304.6 307.7 310.3 325.2 326.9 329.5 66.4 68.2 68.0 6.5 6.9 7.5 5.1 2.2 3.2 Apr. May June 35,884 36,519 36,736 34,147 33,929 33,729 33,658 34,260 34,708 276.6 277.6 279.7 212.8 213.2 215.0 589.4 591.5 596.7 920.5 923.0 929.5 469.2 475.8 481.2 672.3 679.1 682.9 386.7 392.5 398.4 312.7 314.0 317.0 331.1 331.5 332.7 73.9 78.5 81.3 8.1 8.8 8.4 4.6 5.6 5.3 July Aug. Sept. 37,399 37,266 37,282 34,098 33,930 34,000 34,958 35,272 35,296 280.2 280.5 280.8 215.4 215.1 215.0 599.4 602.0 603.6 933.4 936.6 938.9 484.9 487.5 489.1 692.0 697.3 692.3 402.8 405.3 407.6 319.2 321.5 322.8 334.0 334.5 335.3 83.6 83.8 84.8 9.2 9.0 8.6 4.2 6.2 6.3 Oct. Nov. p Dec. p 36,857 36,883 36,927 35,043 35,631 36,199 34,889 34,875 34,680 281.7 283.1 283.6 215.3 215.9 215.9 607.8 612.5 613.8 944.3 951.0 954.8 488.3 491.1 494.1 692.3 693.4 686.0 412.3 414.9 420.4 326.1 329.3 330.2 336.6 338.5 341.1 86.2 85.5 90.3 7.9 7.6 8.4 3.7 4.6 1.8 37,031 36,551 36,786 37,022 35,906 35,454 35,419 35,543 35,065 34,769 34,695 34,948 282.0 283.3 283.2 283.4 215.0 216.1 216.1 216.0 610.0 612.6 612.5 613.7 ----- 488.9 491.3 492.1 492.3 ----- 413.8 414.8 414.4 415.5 328.1 329.3 329.3 330.2 ----- 85.7 85.5 85.1 85.3 7.3 7.1 7.8 8.2 3.2 5.5 5.7 4.7 37,269 36,564 36,816 36,842 36,197 35,917 35,995 36,180 34,991 34,415 34,584 34,711 286.0 284.3 283.4 282.8 218.2 216.6 215.6 215.2 614.9 614.3 613.5 613.8 ----- 493 5 494.6 495.7 493.1 ----- 415.5 418.5 420.3 422.7 328.9 330.0 330.1 331.0 ----- 86.7 88.5 90.2 91.7 7.6 8.1 8.9 8.6 3.6 3.5 3.2 0.1 37,352 36,677 36,791 36,365 34,858 34,376 283.6 281.5 215.9 213.7 614.0 613.7 &#45;&#45;&#45; 494.5 495.4 -- 423.5 425.7 330.4 332.1 &#45;&#45;&#45; 93.1 93.6 8.2 8.1 &#45;&#45;&#45; Weekly: 1974--Nov. 6 13 20 27 Dec. 4 p lip 18p 2 5p 1975--Jan. Ip 8p NOTES: I Estimated monthly average levels derived by averaging end of current month and end of previous month reported data. Reserve requirements on Eurodollar 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 FR 712-T averages except for nonbank commercial paper figures which are for last day of month. Weekly data are not available for M3, total loans and investment and thrift institution deposi . p - Preliminary. Appendix Table III Money Supply Growth Rates M1 M1 less Foreign Official Deposits M1 less Foreign Official Deposits and Deposits due to Foreign Commercial Banks 5.2 5.7 5.7 February 4.7 4.7 5.2 March 0.5 0.5 0.9 April 6.5 6.5 6.1 May 13.4 13.0 12.2 June 13.7 13.8 13.5 July 3.6 3.2 2.3 1973 - January August -0.5 -- -- September -1.4 -1.8 -1.4 4.1 4.5 3.7 November 12.6 11.8 11.0 December 9.4 9.0 7.7 -2.7 -2.7 -4.1 February 9.7 9.8 10.0 March 9.2 9.7 9.4 April 6.1 3.9 4.0 May 4.3 5.7 4.9 June 9.1 7.8 8.0 July 2.1 3.5 1.8 August 1.3 1.7 2.2 September 1.3 0.4 0.4 October 3.8 4.7 4.8 November 6.0 6.4 6.1 December 2.1 0.9 -- October 1974 - January Appendix Table IV Growth Rate in Money Supply (Per cent change at an annual rate) M1 1973 1974 M2 8.6 10.3 8.6 10.3 8.9 5.6 7.7 5.2 7.5 5.0 10.8 8.9 9.8 7.9 5.5 5.8 9.3 9.6 8.8 9.1 II 6.5 7.2 7.7 8.2 6.4 7.3 III 1.6 3.6 4.6 6.2 4.0 5.2 IV 4.0 3.3 6.8 6.4 6.8 5.9 I 3.4 6.8 7.3 II 11.3 7.3 10.6 III 0.6 5.5 IV 8.7 I 9.1 M = Annual rates of growth calculated from average levels in the final months of the quarters. Q = Annual rates calculated from average levels in of the quarters. all three months Appendix Table V Growth Rates in Money Supply for Alternatives M1 M 3 M2 Q M Q 7.5 9.3 10.1 10.2 8.5 10.4 6.9 8.9 9.3 9.7 8.0 9.8 _ M Alt. A 1975 I II 4.2 7.8 9.1 9.0 Alt. B 1975 I II 4.0 7.0 8.3 8.9 Alt. C 1975 I II 3.7 6.0 7.6 7.8 8.6 8.8 M - Annual rates of growth calculated from average levels in last months of the quarters. Q = Annual rates calculated from average levels in all three months of the quarters. 

Federal Reserve (1975, January 20). Bluebook. Bluebooks, Federal Reserve. https://whenthefedspeaks.com/doc/bluebook_19750121

@misc{wtfs_bluebook_19750121,
  author = {Federal Reserve},
  title = {Bluebook},
  year = {1975},
  month = {Jan},
  howpublished = {Bluebooks, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/bluebook_19750121},
  note = {Retrieved via When the Fed Speaks corpus}
}