Bluebook

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Content last modified 6/05/2009. February 14, 1975 STRICTLY CONFIDENTIAL (FR) Class I FOMC MONETARY AGGREGATES AND MONEY MARKET CONDITIONS Prepared for the Federal Open Market Committee By the Staff BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM STRICTLY CONFIDENTIAL (FR) Class I - FOMC February 14, 1975 MONETARY AGGREGATES AND MONEY MARKET CONDITIONS Recent developments (1) M1 contracted at an annual rate of about 9½ per cent in January, and, with recent data suggesting only modest growth in February, a net contraction in M 1 during the two-month target period now seems likely, as the table shows. Flows into time deposits other than money market CD's have been generally well sustained, but, with M 1 weak, Growth of Monetary Aggregates and RPD's in January-February Period 1 Reserve and Monetary Aggregates (Growth at SAAR in per cent) Range of Tolerance Latest Estimates -2.3 RPD MEMO: Federal Funds rate (per cent per annum) 7 --10 4.7 6k--9t 4.6 64--7 2/ Ave, for statement week ending 7.17 Jan. 22 6.99 29 6.46 Feb. 5 6.28 12 1/ These figures do not incorporate the regular quarterly benchmark revision of monetary aggregates that will be published this coming Thursday. Revisions in the series (based in large part on the October call report) were relatively minor; the December level for M was raised by about $500 million and the rate of growth for M1 in 1974 was raised from 4.6 to 4.7 per cent. All tables on subsequent pages of this report (with the exception of Tables 1 and 2 following the charts) are based on the new series. The new and old series are compared in appendix table V . 2/ The range shown reflects the reduction in the lower limit from 6½ per cent on February 6. -2M 2 appears to be growing at only about a 4½ per cent annual rate in the January-February target period--also well below the lower end of the Committee's range of tolerance. In the face of continued weak loan demands, banks have reduced their reliance on non-deposit sources of funds since year-end and have not pressed aggressively to issue large CD's. As a result, the bank credit proxy is expected to show very little growth during the January-February period. (2) Immediately after the January FOMC meeting, the Account Manager began providing reserves with a view to achieving an average Federal funds rate around 7 per cent. When incoming data showed the monetary aggregates expanding at annual rates below the lower ends of the Committee's ranges of tolerance, however, the Desk moved to ease money market conditions. As a result, by the statement week ending February 5, the prevailing funds rate had declined to about 6½ per cent, the lower limit of the range of tolerance agreed upon at the January meeting. On February 5, the Committee concurred in the Chairman's recommendation to reduce the lower limit of the funds rate constraint to 6¼ per cent, and in the statement week just ended the average rate was 6.28 per cent, As the funds rate dropped, member banks reduced borrowings from the discount window further to near minimal levels; in the first two weeks of February such borrowing averaged about $95 million--more than half of which was special, longer-run borrowing--as compared with an average of around $400 million in January. -3(3) The further decline in the Federal funds rate, and the February 3 reduction in the discount rate to 6¾ per cent, have contributed to sharp reductions in other short-term interest rates as well. These declines have ranged generally from 50 to 100 basis points since the last Committee meeting. Rates on private short-term instruments have registered the largest changes and are now 200-300 basis points below their year end levels. per cent. The 3-month Treasury bill has traded most recently around 5.45 Although the rate on prime business loans at leading banks has also been reduced during the inter-meeting period, the level now prevailing at most key banks is 8¾ or 9 per cent; this is high relative to the 6-3/8 per cent rate on 90-119 day commercial paper. (4) The large inter-meeting declines in short-term rates As have contributed to a strong rally in long-term securities markets. a result, yields on corporate and municipal bonds are now 40-60 basis points below their mid-January levels. In the market for longer-term Treasury issues, yields have also moved lower, notwithstanding the Treasury's enlargement of its February refinancing to raise new money and the very heavy volume of Federal deficit financing forecast for the weeks and months ahead by the new Federal Budget. The new note and bond issues offered in the Treasury refinancing were all well received and have most recently traded at premiums as much as 1 point above the average prices at which they were initially auctioned. (5) Savings flows to non-bank thrift institutions--like those to banks--have displayed significant growth in January. However, with mortgage demands remaining weak, these expanded flows have been used for the most part to repay debt and rebuild liquid asset holdings. The -4growth in savings flows, along with the continued modest volume of new mortgage demands and the general decline in other interest rates, has resulted in further reductions of some 40 basis points in conventional mortgage rates since the turn of the year. (6) The table on the following page shows (in percentage annual rates of change) selected monetary and financing 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 lastmonth-of-quarter basis. Projected figures on the two bases are shown in Appendix table IV for the alternatives presented in the next section. Calendar Year 1974 Total reserves Past Twelve Months Jan.'75 over Jan.'74 Past Six Months Jan.'75 over July '74 Past Three Months Jan.'75 over Oct.'74 Past Month Jan.'75 over Dec.'74 8.6 6.6 4.2 8.2 10.0 10.6 8.7 21.6 24.7 20.9 8.8 8.5 3.7 1.6 1.4 4.7 4.1 1.1 -.1 -9.3 M 2 (M1 plus time deposits atcommercial banks other than large CD's) 7.4 7.0 5.4 5.1 2.9 M 3 (M2 plus deposits at thrift institutions) 6.7 6.6 5.6 6.4 5.4 Total member bank deposits (bank credit proxy adj.) 10.2 9.4 4.5 5.5 3.6 Loans and investments of commercial banks 2/ 8.3 7.5 .1 -.2 8.2 2.2 2.2 1.6 2.2 2.6 .4 .3 .4 .2 -.6 Nonborrowed reserves Reserves available to support private nonbank deposits Concepts of Money (Revised Series) M1 (currency plus demand deposits) 1/ Bank Credit Short-term Market Paper (Monthly average change in billions) Large CD's Nonbank commercial paper 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 average 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-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. Prospective developments (7) Alternative policy specifications are summarized below for Committee consideration (with more detailed data shown in the table on p. 6a). Alt. A Alt. B Alt. C Alt. D Range of tolerance for Feb.-March M1 6-8 M2 7k-9k RPD 1 -3% Federal funds rate (inter-meeting range) 4-5 5 k-6- 5-7 4 -6 6 -8- 6-8 5 -7% k-2% -%--1 -1-. 4%-5% 5 -6 6-7 Longer-run growth rates 1/ M1 June'74-June'75 Dec.'74-June'75 Dec.'74-Sept.'75 71 6 8 6% 4 6 6 3 5 6 2% 4% 7k 9k 10% 6% 7 8 6k 6% 7% 6 6k 7 M N2 2 June'74-June'75 Dec.'74-June'75 Dec.'74-Sept.'75 1/ Figures shown assume staff GNP projection for first three quarters of 1975, and Federal funds rate behavior as described in the para- graphs below. (8) The specifications in the preceding paragraph assume not only that staff GNP projections for the first three quarters of the year are realized but also that a more normal relationship is re-established between the transactions demand for money, narrowly defined, and -6aAlternative Longer-Run Growth Rates for Key Monetary Aggregates M1 Alt. A 1975 1975 Jan. Feb. Mar. June Sept. 1st Q. 2nd Q. 3rd Q. Feb. M r. 282.1 283.5 285.4 293.0 301.6 M2 Alt. B Alt. C 282.1 283.4 285.1 290.5 297.0 282.1 283.4 284.9 289.4 295.3 1.5 10.7 11.7 1.1 7.6 9.0 0.8 6.3 8.2 6.0 8.0 5.5 7.2 5.5 6.4 Alt. D 282.1 283,3 284.7 288.3 293.4 5.1 5.9 , I'- ,H Alt. A Alt. B, Alt. C Alt. D 615.8 615.8 619.2 619.4 623.0 623.5 635.2 637.6 649.9 653.9 Growth Rates 6.7 6.0 5.7 11,5 9.0 7.8 10.2 9.3 13.4 615.8 619.5 624.6 642.6 664.1 7.2 9.9 6.6 7.4 7.0 7.9 Alt. A 1975 Alt. D- 959.4 959.4 965.6 959.4 966.0 959.4 965.8 974.6 1005.7 1040.4 973.5 999.3 1027.3 5.4 6.9 8.3 8.2 12.8 13.8 7.7 10.6 11.2 9,4 10.0 7.2 8.4 9.1 6.4 6.8 8.3 10.7 8.0 9.6 7.9 8.6 7.8 8.2 965.7 972.7 995.5 1020.5 7.4 2 Alt. B Alt. C Alt. D Alt. A Alt. B Alt. C Alt. D 708.7 712.8 718.5 738.1 761.3 708.7 712.7 717.3 732.9 750.7 708.7 712.5 716.8 730.3 746.4 708.7 712.4 716.2 727.9 742.1 495.8 495.5 498.8 510.3 524.1 495.8 495.4 498.3 508.4 521.0 495.8 495.6 499.5 513.5 530.6 1st Q. 2nd Q. 3rd Q. 4.2 11.2 13.3 3.6 9.2 10.8 3.2 8.1 9.9 3.0 7.0 8.8 7.9 10.9 12.8 7.2 8.7 9.7 6.9 7.5 8.8 6.6 6.5 7.8 Feb. -0.5 9.4 -0.7 8.0 -1.0 7.0 -1.2 6.5 6.9 9.6 6.8 7.7 6.4 7.2 6.3 6.4 Jan. Feb. Mar. June Sept. 495.8 495.3 498.0 506,7 517.8 Growth Rates 1975 Mar. 1/ M 1 is defined as M2 plus CD's. I Alt. C 619.1 622.6 633.3 646.4 615.8 Credit Proxy Alt. A I Alt. B 972.2 992.5 1015.1 -7nominal GNP. In particular a rebound in money demand is anticipated for the weeks immediately ahead following the unusually large contraction of recent weeks--an expectation that is supported in some degree by the early February data. Thus, M 1 growth is expected to be fairly sub- stantial under any of the alternatives in the February-March period. (9) Of the alternatives shown, alternative A encompasses the 6 per cent annual growth rate for M 1 specified by the Committee at its last meeting in its longer-run targets for the first half of '75. This alternative also shows a 9¾ per cent growth rate for M2, slightly higher than the rate specified by the Committee last time. The projected relationship between M 1 and M2 is changed because a further decline in market interest rates is now assumed to be necessary if the indicated M1 growth rate is to be attained by mid-year, and that should result in larger inflows of consumer-type time and savings deposits. (10) Given the January shortfall in M1 and the sharply weaker economy now projected by the staff for the first and second quarters of this year, we would expect it to be necessary for the Federal funds rate to decline to around the middle of a 4-5 per cent range between now and mid-March if the growth in the aggregates as shown under alternative A were to be attained. Some further decline in the funds rate might be needed by early spring. (11) So steep a drop in interest rates would have a very substantial cumulative impact on the demand for money, narrowly and broadly defined. By the second quarter, the staff would expect M 1 growth, for example, to be at about a 10 per cent annual rate, and to accelerate further in the third quarter when a sharp recovery in GNP is projected. -8Thus, over the first nine months of the year, this alternative implies an 8 per cent annual rate of growth in M1. If the Committee should wish to get back on the 6 per cent growth trend after mid-year, a sharp rise in interest rates would be necessary during the late spring and summer. (12) The specifications of alternative B involve attainment of a 6 per cent rate of growth in M1 by September, rather than by midyear. With the target horizon stretched out, interest rates are likely to decline more moderately over the near-term, and the later upward movement is likely to be more delayed and probably less sharp. The annual growth rate for M1 over the first half of this year under this alternative would be around 4½ per cent, while M2 would expand at about a 7½ per cent rate. (13) Alternative B contemplates a further decline in the Federal funds rate over the next few weeks to about the middle of a 4¾-5¾ per cent range. Further significant declines in the funds rate in the spring may not prove necessary, assuming that GNP is no weaker than projected for the first half of this year and that the sharp expansion in economic activity projected for the third quarter develops. (14) Private short-term credit demands are expected to remain weak into early spring, but the Treasury is likely to borrow an additional $15-$18 billion of new cash between now and mid-April. The provision of bank reserves and easing of money market conditions needed to sustain growth in the monetary aggregates, as specified in alternative B, should, at least over the near-term, permit the new Treasury debt to be absorbed at declining interest rates, though the reductions may be modest. The -93-month bill rate could drop by about ½ percentage point to around 5 per cent between now and the next Committee meeting. Given the shift in borrowing demands from private sectors to the Treasury, private short-term rates may decline more. Longer-term rates may show rather modest further declines, however, since corporate and state and local government demands on bond markets are expected to remain sizable. (15) Alternative C contemplates a smaller reduction in the funds rate than alternative B and hence a less rapid growth in the monetary aggregates between now and the end of summer. Under this alternative, M1 is indicated to expand at an annual rate of about 5 per cent over the first nine months of the year. By the time the year is over, M1 may have grown at near a 6 per cent rate under this alternative if economic activity in the second half of the year turns out to be as strong as projected in the Green Book. (16) Under alternative C, the funds rate would be expected to decline to around 6 per cent--the mid-point of the range shown in paragraph (7)--or a little below, between now and the next Committee meeting. Such a decline is probably not much more than the market has already discounted. As a result, interest rates may decline little further over the next few weeks under this alternative. Moreover, the weight of Treasury financings could place upward pressure on the rate structure rather soon. -10(17) Under alternative D, which involves money market conditions in the neighborhood of those prevailing on average in the period since the last meeting, M 1 would grow at a rate of about 4 per cent over the first nine months of the year. If the funds rate was around the 6½ per cent mid-point of the range shown for that alternative, market rates would probably rise--possibly sharply in the Treasury market--in the weeks immediately ahead. Net inflows of savings to thrift institutions would not be likely to strengthen from their recent pace, and might slacken somewhat--which would tend to limit the extent of recovery in housing. In general, prospective market developments under this alternative may have implications for the projected pattern of economic recovery in the second half of the year. -11Proposed directive (18) Presented below are four 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. In all four alternatives, it is proposed to delete the reference to Treasury financing--because the quarterly financing announced on January 22 has been completed--and the Board's action on reserve requirements. Alternative A To implement this policy, while taking account of the forthcoming Treasury financing,] developments in domestic and [DEL: international financial markets, [DEL: and the Board's action on reserve requirments,] the Committee seeks to achieve bank reserve and money market conditions consistent with 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 [DEL: the financing,] Treasury forthcoming developments in domestic and international financial markets, {DEL: on action Board's the and reserve requirements,] 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 [DEL: the financing,] Treasury forthcoming developments in domestic and international financial markets, [DEL: on action Board's the and reserve requirements,]the Committee seeks to achieve bank reserve and money market conditions consistent with [DEL: rapid more MODERATE growth in monetary aggregates over the months ahead than hasoccurred months.] recent in Alternative D To implement this policy, while taking account of [DEL: the financing,] Treasury forthcoming developments in domestic and international financial markets, [DEL: and the Board's on action reserve requirements,] the Committee seeks to achieve bank reserve and money market conditions consistent with[DEL: rapid more MODEST growth in monetary aggregates over the months ahead months.] recent in occurred has than CHART 1 CONfIDENTIAL (FR) CLASS In-FOMC 2/14/75 RESERVES AVAILABLE TO SUPPORT PRIVATE NONBANK DEPOSITS BILLIONS OF DOLLARS 40 - -134 I 0 S 1973 D M J 1974 S 0 Break In Series Due To Changes In Reserve Requirements M 1975 J I -1 N 1974 D J F 1975 CHART 2 CONFIDENTIAL (FR) CLASS II-FOMC 2/14/75 MONETARY AGGREGATES NARROW MONEY SUPPLY Ml 1973 1974 BILLIONS OF DOLLARS 1975 F 1974 1975 CHART 3 2/14/75 MONETARY AGGREGATES ADJUSTED CREDIT PROXY BILLIONS OF DOLLARS 500 - 500 480 480 440 I RVES 1973 * Break In Series Due To Changes In Reserve Requirements ! j I BILLIONS OF 1974 1975 2/14/75 CHART 4 MONEY MARKET CONDITIONS AND INTEREST RATES MONEY MARKET CONDITIONS PER CENT 14 INTEREST RATES Short-term PERCENT INTEREST RATES Long-term PER CENT - 11 - 9 FUNDS -7 BILLIONS OF DOLLARS --1 q -5 I IL 1974 1975 1974 1975 1974 1975 3 TABLE 1 CONFIDENTIAL (FR) CLASS II - FOMC FEBRUARY 14, BANK RESERVES (ACTUAL AND CURRENT PROJECTIONS) -------- ------ - - - -- RESERVES------ --AVAILABLE------------FOR--- -------- - ---- --- II RESERVES AVAILABLE FOR PRIVATE NONBANK DEPOSITS - --- - II SII------------------NONBORROWED I II TOTAL PERIOD -- - - RESERVES ANNUAL RATES OF CHANGE QUARTERLY: ---- ----1974--1ST OTR. TR. 2NO 3RD OTR. 4TH QTR. 34,444 3 5,465 II (34,110) (34,105) II II II II I ii II IIl II It II II I I 5.7 19.1 9.1 0.7 I MONTHLY: 1974--NOV. DEC. 36,966 (35,563) -3.0 !I II II II 6.4 I 1975--JAN. FEB. 1.4 7.91 JAN.-FEB. I II II II II 11 4.6 ) WEEKLY LEVELS-SMILLIONS I (4) 35,622 36,17 If 1975--JAN. FEB. I --- - -- - -- REQUIRED RESERVES II---------------------------------- SEAS ADJ I NON SEAS ADJ SEAS ADJ INON SEAS ADJ I1 RESERVES ------ - --------- ------------- - ---------- - -(1) I 12) II (3) 121 II MONTHLY LEVELS-$MILLIONSI II ------------------I 1974--NOV. I 34,868 3 4,675 II 36,874 34,63, II 3 4,648 DEC. 36,906 ------- - - -- AGGREGATE RESERVES 1975 I 36,567 (35,466) 1.2 0.8 5.6 SEASONALLY ADJUSTED PRIVATE DEMAND (7) (8) 20,496 20,507 9,200 9,108 4,967 4,761 2,007 2,272 20,184 1(19891) 9,113 I 9,069) -1.6 16.0 17.6 34.3 2.8 8.5 ( -7.8) ( 4,970 I 4,9273 2,522 ( 1,452) 0.4 2.2 0.1 5.4 20.9 S -16.1 ) GOV'T AND INTERBANK 16) 34.4 10.0 -25.7 ) CO*S AND NON DEP 15) 1.3 20.1 8.2 4.2 f OTHER TIME DEP I -14.7 15.9) 0.4) 2.4 ) I! JAN. 1 34,758 8 15 22 29 34.347 34,414 34,618 34,359 5 12 34,417 34,121 3 5,410 3 5,083 3 5,672 3 5,903 3 5,325 II II II II II I 37,279 36,677 37,141 37,273 36,815 36,718 36,365 36,533 36,679 36,672 36,666 35,972 36,569 35,882 II FEB. 3 5,058 3 4,050 II II I I 20,306 20,129 20,352 20,243 20,048 9,061 9,102 9,080 9,126 9,146 4,814 4,937 4,995 5,006 4,981 2,521 2,330 2,726 2,654 2,456 19,994 20,030 9,124 9,062 4,918 4,924 2,249 1,851 II NOTE: DATA SHOWN IN PARENTHESES ARE CURRENT PROJECTIONS. AT THE FOMC MEETING OF JAN. 21, 1975 THE COMMITTEE AGREED ON A RPO RANGE OF 6.25 TO 9.25 PERCENT FOR THE JANUARY-FEBRUARY PERIOD. TABLE CONFIDENTIAL (FR) CLASS II - FOMC 2 FEBRUARY 14, MONETARY AGGREGATES (ACTUAL AND CURRENT PROJECTIONS, SEASONALLY ADJUSTED) S MONEY SUPPLY NARROW I BROAD (Ml) I (M2) I I PERIOD (1) I I I I ADJUSTED II U.S. CREDIT II GOVT. I PROXY II DEPOSITS I (2) (3) 612.6 613.9 491.2 494.3 II 1975--JAN. FEB. 281.6 (282.7) 615.4 (618.71 495.8 (495.0) 7.6 ( 6.5) 8.2 20.4 6.6 4.3 15.1 21.3 9.2 12.6 12.8 8.6 7.3 9.0 26.3 78.2 17.2 25.9 6.8 2.1 9.5 2.5 7.6 7.6 15.9 11.8 2.9 -9.7 67.4 -9.3 ( 4.71 2.9 ( 6.41 3.6 (-1.9) 18.3 1 7.0) 13.4 S7.9) 1-2.3) ( 4.7) ( (12.7) (10.71 (19.9) 424.0 425.8 427.0 426.7 427.6 331.0 332.5 334.1 334.1 334.7 93.1 93.3 92.9 92.7 92.8 6.2 8.1 7.4 7.6 7.3 427.9 429.0 334.8 335.8 93.1 93.2 6.8 6.5 29 494.9 495.6 496.5 495.9 495.1 5 PI 12 PEI 281.4 282.5 616.1 618.3 494.3 494.5 --------- 1 34.6 (5.2) I OI 0.0 0.1 1.9 1.6 0.1 II I NOTE: 0.1 0.2 II II II 614.7 614.0 615.7 616.0 615.6 I I I 0.8) 283.7 281.5 281.6 282.0 280.9 1 22 - ------- 92.9 (93.3) 9.3 7.7 4.6 6.8 ---------- I ---- 333.8 (336.0) 426.8 (429.3) 0.7 ( 0.2) 5.5 6.5 1.6 4.3 WEEKLY LEVELS- -$ILLIONS --- 7.6 8.4 414.9 420.4 1.9 I JAN.-FEB. FEB. 85.5 90.3 4.6 I 1975--JAN. FEB. 15 329.3 330.1 (6) I MONTHLY --1974--NOV. DEC. 8 (8) (5) II PERCENT ANNUAL GROWTH -------- ---------QUARTERLY --------1974--1ST QTR. 2NO OTR. 3RD QTR. 4TH QTR. JAN. NONDEPOSIT I SOURCES OF I FUNDS (7) (4) II 263.3 283.8 I II I MONTHLY LEVELS-SBILLIONSI --------------------I 1974--NOV. DEC, I II TIME AND SAVINGS DEPOSITS I OTHER I TOTAL I THAN CD S I CD S DATA SHOWN IN PARENTHESES ARE CURRENT --------- --------- - ---- - - ---- PROJECTIONS. - -- -- - - - ---------- P PE ------- PRELIMINARY PARTIALLY ESTIMATED --- - -- - - - - ---- - 1975 CONFIDENTIAL (FR) CLASS II - FOMC TABLE FEBRUARY 14, 1975 3 RESERVE EFFECT OF OPEN MARKET OPERATIONS AND OTHER RESERVE FACTORS (Millions of dollars, not seasonally adjusted) Open Market Operations 1/ RP's Coupon Agency Bills Net 3/ Issues Isques & Accept. (4) (3) (2) (1) Total (5) Daily Average Reserve Effects 2/ Other 4/ A Member Open Market Factors Bank Borrowing Operations (8) (7) (6) 4 in reserve categories req. res. against available res. 5/ U.S.G. and interb. (6+)(7)+(8)-(q) (10) (9) / Target available reserves 5/ 11 Monthly 1974 -- 1975 -- 898 862 -594 125 -176 726 235 191 -3,760 2,225 549 -2,011 3,322 322 1,601 141 -32 309 39 -60 -901 -464 99 465 -450 -67 544 166 74 375 180 375 Oct. Nov. Dec. -1,727 1,217 729 212 280 331 360 -243 981 -976 -1,970 2,739 393 -633 327 2,963 -1,494 -507 -583 1,990 201 -2,376 177 -183 66 -314 204 -62 315 395 450 Jan. Feb. Mar. -1,102 421 -14 1,082 388 -636 -5,269 3,987 -4,715 4,043 532 -243 -411 -425 July Aug. Sept. 965 -670 Weekly 1974 -- 1975 -- 1/ 2/ 3/ 4/ 5/ - 371 -- 114 54 378 -722 63 -172 406 255 4 11 554 56 - 18 25 313 399 -280 360 -- 1,09] 757 1,764 1,436 432 2,612 170 -156 Jan. 1 8 15 22 29 -85 -309 -371 -156 12 406 - -14 -- -3,323 -3,069 2,492 4,601 -3,119 -3,409 -3,393 2,526 4,445 -3,107 -103 -1,918 -863 664 314 -101 -249 296 -14 -451 947 1,934p 46 1, 7p 77 -5 p -822p 293 84p 311p -158p 8 -3 1p -38 -2,271 -689 -66p -299 -1,091 -- 420p 5 12 19 26 -46 Feb. -2,608 450 -317P 589p 23 1p -578p -249p 3,612 2,521 -1,899 -7 937p 60p -1,029p Dec. -- -133 -2,373 auctions. Represents change in System's portfolio from end-of-period to end-of-period; includes redemptions in regular bill 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. Target change for Jan. and Feb. reflects the target adopted at the Jan. 21, 1975 FOMC meeting. Reserves to support private nonbank deposits. Target change for previous months reflects the bluebook patterns that are consistent with target ranges that were adopted during the month. CONFIDENTIAL (FR) CLASS II - FOMC TABLE 4 FEBRUARY 14, 1975 SECURITY DEALER POSITIONS AND BANK POSITIONS Millions of dollars U.S. Govt. Security Dealer Positions Period Bills (1) 1973 -- High Coupon Issues (2) Member Bank Reserve Positions Dealer Positions Corporate Bonds Municipal Bonds Excess** Reserves Borrowing at FRB** Seasonal Total (b) Basic Reserve Deficit 38 Others 8 New York to) 3,796 897 1,299 -301 631 -240 2,561 688 -5,243 -1,831 -10,661 3,678 -289 2,203 -309 628 -168 3,906 647 -7,870 -2,447 -12,826 Feb. Mar. 3,102 2,436 1,986 540 1,619 583 162 184 134 1,051 1,162 1,314 -4,753 -5,262 -5,030 -10,893 -10,769 -11,058 Apr. May June 1,435 408 580 99 85 9 182 178 204 1,736 2,590 3,020 -3,952 -3,171 -4,445 -11,603 July Aug. Sept. 457 1,758 2,309 -214 398 552 162 107 180 3,075 3,337 3,282 -3,522 -4,231 -4,235 - 9,555 - 9,224 - 8,250 Oct. Nov. Dec. 2,174 2,900 2,985 654 1,608 1,836 197 205 258 1,813 1,252 727 -4,602 -6,322 -5,960 - 8,689 - 9,715 1975 -- Jan. *2,501 *2,050 -5,378 - 9,744 1974 -- Dec. 2,975 2,965 3,678 2,942 1,630 -5,400 -7,245 -6,704 -5,243 - 9,889 1 8 15 22 29 2,234 2,487 3,351 *1,586 *2,308 2,507 5 12 19 26 *2,739 *3,555 Low 1974 -- High Low 1974 -- Jan. 1975 -- Jan. Feb. NOTE: 1,678 1,714 1,680 7 1 5p 283 -159 217 429 39 8 p 1,070 648 818 662 2,036 *1,619 *1,615 577 8 17 p -13p 243p 185p 561 2 31 p 608p 4 59 p 14 3 p *2,178 *1,863 380p 102p 97p 90p 2,845 -4,771 -5,218 -5,633 - 4,048 - 6,046 - 9,091 - 9,920 -10,169 -10,614 -10,525 -10,129 - 9,016 -10,332 -10,677 -5,853 -4,713 - 9,616 -5,628p 2 -7, 35p - 8,663p - 8,504 - 9,310p 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) 5 TABLE FEBRUARY 14, 1975 SELECTED INTEREST RATES Per Cent Lone-Term Rhort-Trm Treabury Bills Period Federal Funds 90-Day 1-vear (1) Shr-Tr 90-119 Day Commercial Paper Aaa Utility New Recently Issue Offered CD's New Issue-NYC 90-119 Day 60-89 Day U.S. Government (10-yr. Constant Maturity) (10) FNMA Auction Yields (11) (6) (7) (8) 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 10.61 8.05 10.52 8.14 7.15 5.16 8.14 6.93 10.59 8.21 8.12 8.46 8.21 8.23 8.44 5.22 8.71 5.41 6.99 6.96 7.21 8.95 9.13 9.40 5.73 6.02 6.13 7.51 7.58 7.54 9.07 9.41 9.54 (5) (4) Municipal Bond Buyer (9) 1973--High Low 10.84 5.61 10.50 1974--High Low 13.55 8.45 12.25 12.25 8.00 12.00 7.88 1974-Jan. 9.65 8.97 9.35 8.86 8.00 8.64 9.05 8.09 8.69 8.83 Feb. Mar. Apr. May June 10.51 11.31 11.93 9.92 10.82 11.18 9.81 9.78 10.83 11.06 10.90 10.88 8.99 9.2'. 9.38 July Aug. Sept. 12.92 12.61 11.34 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 Oct. Nov. Dec. 10.06 9.45 8.53 7.46 7.47 7.15 9.55 8.95 9.33 8.72 8.84 10.16 9.21 9.53 10.23 9.34 9.56 6.57 6.61 7.05 7.90 7.68 7.40 10.22 9.18 9.35 8.78 9.00 1975--Jan. 7.13 6.26 7.39 7.43 7.45 9.36p 9.45p 6.82 7.39 9.25 4 11 18 25 9.02 8.86 8.72 8.45 7.45 7.28 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 6.89 7.15 7.08 - 9.64 7.08 7.61 7.37 7.24 7.37 9.61 6.99 7.20 6.95 6.63 6.61 1 8 15 22 29 7.35 7.70 7.22 7.17 6.99 7.02 6.68 6.63 6.32 5.62 6.69 6.56 6.44 6.33 5.91 9.34 8.43 7.73 7.18 6.55 9.00 7.88 7.25 6.75 6.25 9.00 7.75 7.38 6.63 6.50 - 9.67 7.08 6.99 6.90 6.59 6.54 7.37 7.32 7.38 7.44 7.41 9.47 6.34 6.27 7.31 1974--Dec. 1975--Jan. 5.63 7.08 1974--Feb. 5 12 19 26 6.46 6.28 5.62 5.72 5.65 5.58 6.60 6.38 Daily-Feb. 6 13 6.21 6.31p 5.60 5.62 5.45 5.60 6.38 6.38 NOTE: 7.88 7.97 8.56 9.62 9.38 9.45 9.00 8.89 9.02p 6.25 6.25 6.00 6.00 9.45 9.55 9.47 9.21 9.12 9.16p 5.20 8.43 8.48 8.53 10.58 9.87 9.53 9.52 9.37 9.12 8.98 7.32p 7.28 n.a. _ -I ~-I I ~L--- ~1- _- -I Weekly data for colums 1 to 4 are statement week averages o 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 preceeding 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. February Appendix Table 1 14, 1975 RESERVES AND MONETARY VARIABLES MONEY STOCK RESERVES Period Total 1 BANK CREDIT MEASURES Available to NonSupport borrowed Private Deposits M1 M3 Adjusted Credit Proxy 5 6 7 (Per cent annual rates of growth) Total Loans and Investments 8 Total Time Te Tme Other Than CD's Tr Thrift Insttution Deposits 9 10 11 CD's Nondeposit Funds U.S. Gov't. Demand Funs 2 3 10.6 7.8 7.1 7.7 7.2 9.1 10.0 9.3 7.2 8.7 6.1 4.7 11.1 8.8 7.4 13.1 8.7 6.7 11.3 10.4 10.2 14.6 13.5 8.3 15.7 16.2 15.3 13.5 11.4 9.7 16.7 8.5 5.6 10.4 19.9 26.5 -0.6 2.3 1.8 -0.2 -1.7 -2.0 Semi-annually: Ist Half 1973 2nd Half 1973 6.4 8.9 1.4 13.1 9.8 7.8 7.4 4.7 9.1 8.3 9.5 7.5 13.5 6.8 16.6 9.6 19.8 11.4 10.6 11.6 10.4 6.3 16.7 3.2 0.7 1.6 0.8 -2.5 1st Half 1974 2nd Half 1974 10.6 6.2 1.0 20.3 12.4 4.9 6.3 3.1 8.7 5.8 7.7 5.5 14.5 5.4 15.0 1.4 18.6 11.0 10.9 8.1 5.9 5.1 17.5 9.0 1.8 -- 1.4 -3.4 Quarterly: 1st Qtr. 1974 2nd Qtr. 1974 3rd Qtr. 1974 4th Qtr. 1974 1.3 20.1 8.2 4.2 1.2 0.8 5.6 34.4 5.7 19.1 9.1 0.7 5.5 7.0 1.6 4.6 9.3 7.9 4.5 7.0 8.8 6.6 4.0 6.9 8.2 20.4 6.6 4.3 17.5 12.0 5.6 -2.8 15.1 21.3 9.1 12.6 12.8 8.8 7.1 9.0 7.9 3.9 3.1 6.9 4.2 13.3 3.5 5.5 0.9 0.9 0.2 -0.2 -0.7 2.1 1.0 -4.4 32.6 -23.6 -4.7 31.1 21.2 7.1 21.7 -4.3 7.1 -1.8 -1.6 16.0 42.6 -29.2 -9.2 17.2 -7.7 -7.1 13.1 -5.9 9.7 49.6 17.6 34.3 5.9 2.9 8.2 19.1 21.5 15.7 8.6 10.8 7.8 -1.3 -3.0 6.4 -2.7 9.7 9.2 6.1 4.3 10.4 2.1 0.9 1.7 4.7 6.8 2.1 6.9 11.1 9.7 8.0 4.5 11.2 5.2 5.0 3.2 8.5 9.7 2.5 7.2 9.5 9.4 7.3 3.4 8.8 4.9 3.9 3.1 7.2 8. 5 5.0 12.3 2.9 9.2 29.6 16.9 13.6 9.2 6.4 3.9 -5.2 7.6 16.5 17.0 18.4 17.9 12.1 5.7 16.0 9.4 -8.6 -4.5 -12.8 21.4 16.2 7.3 26.6 18.0 18.0 13.3 7.1 6.8 13.5 7.6 16.2 15.6 12.6 9.7 9.3 5.0 11.8 7.9 8.6 4.5 11,9 12.2 2.9 7.8 6.3 9.6 5.8 1.5 4.3 4.7 1.8 2.9 4.3 7.1 9.2 2.6 1.8 -0.2 5.9 4.6 2.8 2.3 0.2 1.0 1.4 -0.7 4.8 -0.1 0.4 0.6 0.6 0.7 -0.4 0.8 -0.2 -0.4 -0.7 -0.3 0.8 1.2 -2.9 1.0 1.4 1.0 -0.3 -1.1 2.0 0.1 -2.6 0.9 -2.7 10.0 20.9 1.4 -9.3 2.9 5.4 3.6 8.2 18.0 13.5 9.9 2.6 -0.8 -1.2 Annually: 1972 1973 1974 4 M2 OTHER MEASURES 12 13 14 (Dollar change in billions) Monthly: 1974--Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. 1975--Jan. NOTES: p 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 February 14, 1975 Appendix Table 2 RESERVES AND MONETARY VARIABLES SEASONALLY ADJUSTED, BILLIONS OF DOLLARS Period Total Available to to Non rowed Support Pvt M1 Total M2 MEASURES M3 Pvt Loans Loans Proxy Invest Total Time Time INonOther Than CD's Thrift InstN n tuti U S. CD's deposit Gov't Funds Demand 14 15 D 13 10 11 12 559.0 634.6 313.8 364.5 269.9 300.7 297.5 322.8 43.9 63.8 4.3 6.6 5.6 3.9 453.3 454.4 457.9 643.3 652.4 662.4 371.0 376.0 378.3 304.6 307.8 310.3 324.9 326.6 329.2 66.4 68.2 68.0 6.5 6.9 7.5 5.1 2.2 3.2 920.2 922.8 929.6 469.2 475.8 481.2 672.3 679.1 682.9 386.7 392.5 398.4 312.7 314.0 317.1 330.8 331.2 332.4 73.9 78.5 81.3 8.1 8.8 8.4 4.6 5.6 5.3 599.7 602.2 603.8 933.4 936.4 938.8 484.9 487.5 489.1 692.0 697.3 692.3 402.8 405.2 407.5 319.2 321.5 322.7 333.7 334.2 335.0 83,6 83.8 84.8 9.2 9.0 8.6 4.2 6.2 6.3 215.7 216.5 216,6 608.1 613.0 614.3 944.4 951.1 955.1 488.3 491.2 494.3 692.3 693.4 686.0 412.1 414.7 420.3 325.9 329.2 330.0 336.2 338.2 340.8 86.2 85.5 90.3 7.9 7.6 8.4 3.7 4 6 1. 9 282.1 214.1 615.8 959.4 495.8 690.7 426.6 333.7 343.6 92.9 7.6 0.7 34,919 34,424 34,542 3 4 66 , b 286.4 285.2 283.9 283.2 218.6 217.6 216.1 215.5 615.3 614.8 614.1 613.9 ----- 493.5 494.7 495.9 493.1 ----- 415 5 418.1 420.4 422.4 328.9 329.6 330.1 330,7 ----- 86.7 88.5 90.2 91.7 7.6 8.1 8.9 8.6 3.6 3.4 3.3 0.3 36,718 36,365 36,533 36,679 34,758 34,347 34,414 34,618 284.3 282.0 282.1 282.5 216.5 214.2 214.1 214.2 615.1 614.3 616.1 616.4 ---- 494.9 495.6 496.5 495.9 ----- 423.9 425.7 426.9 426.6 36,672 34,359 281.4 213.1 616.0 -- 495.1 -- 427.4 330.8 332.3 334.0 333.9 334.6 ----- 93.1 93.3 92.9 92.7 92.8 8.2 8.1 7.4 7.6 7.3 -0.1 1.9 1.6 0.1 427.8 334.6 - 93.1 6.8 0.1 2 3 4 5 6 7 8 31,456 35,164 30,406 33,867 29,092 32,965 255.8 271.5 198.9 209.9 525.7 572.2 823.3 895.0 406.4 448.7 Monthly: 1974--Jan. Feb. Mar. 35,820 35,115 34,978 34,769 33,924 33,664 32,824 32,904 33,130 270.9 273.1 275.2 208.9 210.4 211.9 575.5 580.9 585.5 900.4 907.5 914.6 Apr. May June 35,884 36,519 36,736 34,147 33,929 33,729 33,658 34,260 34,708 276.6 277.6 280.0 212.8 213.3 215.4 589.4 591.6 597.1 July Aug. Sept. 37,399 37,266 37,282 34,098 33,930 34,000 34,958 35,272 35,296 280.5 280.7 281.1 215.7 215.3 215.3 Oct. Nov. Dec. 36,857 36,874 36,906 35,041 35,622 36,173 34,889 34,868 34,634 282.2 283.8 284.3 36,966 36,567 34,444 4 11 18 25 37,179 36,565 36,817 36,863 36,109 35,917 35,999 36,201 1975--Jan. 1 p 15p 22p 37,279 36,677 37,141 37,273 29p 36,815 ( and ments Annually: 1972 Dec. Dec. 1973 1975--Jan. Total Adj Ad Credit Dep Deposits 1 P OTHER BANK CREDIT MONEY STOCK MEASURES RESERVES 9 Weekly: Dec. 8 Feb. NOTES. / 5p 36,666 36,569 34,417 282.0 213.8 616.6 - 494.3 - Estimated monthly average levels derived by averaging end of current month and end of previous month rep rted 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 foi last day of month. Weekly data are not available for M3, total loans and investment and thrift institution deposits. p - Preliminary. Appendix Table III Growth Rate in Money Supply (Per cent change at an annual rate) M Q M I 3.4 6.8 7.3 II 11.3 7.3 III 0.6 IV M Q 9.1 8.6 10.3 10.6 8.6 10.3 8.9 5.5 5.6 7.7 5.2 7.5 8.7 5.0 10.8 8.9 9.8 7.9 I 5.5 5.8 9.3 9.6 8.8 9.1 II 7.0 7.3 7.9 8.3 6.6 7.4 1.6 3.9 4.5 6.2 4.0 5.2 4.6 3.7 7.0 6.5 6.9 6.0 1973 1974 III IV Q M = Annual rates of growth calculated from average levels in the final months of the quarters. Q = Annual rate calculated from average levels in all three months of the quarters. Appendix Table IV Growth Rates in Money Supply for Alternatives MI M M2 Q M A M M QM 8.2 7.0 Q Alt. A 1975 I II III 1.5 0.4 5.4 6.7 10.7 9.3 11.5 10.5 12.8 11.7 11.7 11.6 13.4 12.8 13.8 13.5 Alt. B I 1.0 0.1 6.0 5.1 7.7 6.7 II 7.7 7.0 9.0 8.5 10.6 10.0 9.0 8.7 10.2 9.9 11.2 11.1 1975 III Alt. C I 0.8 0.1 4.9 7.4 6.6 II 6.3 6.0 7.5 9.4 9.0 8.2 7.8 8.9 10.0 9.9 4.8 7.2 1975 III Alt. D 1975 I 0.6 II 5.1 4.9 6.7 8.4 7.1 6.7 7.9 9.1 III 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. Appendix Table V Comparison of Old and Revised Money Stock Growth Rates (Per Cent Annual Rates of Change) M1 M2 Old Revised Old Annual: 1974 4.5 4.7 7.3 Half-year: 1974 I II 6.0 2.9 6.3 3.1 Quarterly: 1974 I II III IV 5.5 6.5 1.6 4.3 -2.7 9.7 9.2 6.1 4.3 9.1 2.1 1.3 1.3 3.8 6.8 2.1 Monthly: 1974 Jan Feb Mar April May June July Aug Sept Oct Nov Dec M3 Revised Old Revised 7.4 6.7 6.7 8.6 5.8 8.7 5.8 7.6 5.5 7.7 5.5 5.5 7.0 1.6 4.6 9.3 7.7 4.6 6.8 9.3 7.9 4.5 7.0 8.8 6.4 4.0 6.9 8.8 6.6 4.0 6.9 -2.7 9.7 9.2 6.1 4.3 10.4 2.1 0.9 1.7 4.7 6.8 2.1 6.9 11.1 9.7 8.0 4.3 10.5 5.4 5.2 3.2 8.3 9.5 2.5 6.9 11.1 9.7 8.0 4.3 11.2 5.2 5.0 3.2 8.5 9.7 2.5 7.2 9.3 9.5 7.3 3.3 8.5 5.0 4.1 2.9 6.9 8.6 4.9 7.2 9.4 9.4 7.3 3.4 8.8 4.9 3.9 3.1 7.2 8.5 5.0 

Federal Reserve (1975, February 18). Bluebook. Bluebooks, Federal Reserve. https://whenthefedspeaks.com/doc/bluebook_19750219

@misc{wtfs_bluebook_19750219,
  author = {Federal Reserve},
  title = {Bluebook},
  year = {1975},
  month = {Feb},
  howpublished = {Bluebooks, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/bluebook_19750219},
  note = {Retrieved via When the Fed Speaks corpus}
}