Bluebook

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Content last modified 6/05/2009. Strictly Confidential (FR) Class I FOMC March 14, 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 STRICTLY CONFIDENTIAL (FR) March 14, 1975 CLASS I - FOMC MONETARY AGGREGATES AND MONEY MARKET CONDITIONS Recent developments (1) M 1 expanded at an annual rate of about 7 per cent in February, and recent data suggest a roughly similar growth rate for March. For the two-month target period, M 1 thus appears to be growing at a rate in the upper half of the Committee's range of tolerance, as shown in the table. Growth of M 2 for the February-March period appears to be running at an annual rate of about 9 per cent or ½ percentage point above the upper limit of its range of tolerance, as time deposits other than money market CD's expanded more rapidly than expected in February. Recent growth of both M 1 and M 2 may have been bolstered to some extent by unusually large Federal income tax refunds in February. Growth of Monetary Aggregates and RPD's in February-March Period Reserve and Monetary Aggregates (Growth at SAAR in per cent) M1 M2 RPD Memo: Federal funds rate (per cent per annum) Range of Tolerance Latest Estimates 5½-7½ 7.0 6k-8 9.2 5t-2t -2.1 5t-6k Avg. for statement week ending Feb. 19 26 Mar. 6.29 6,15 5 5.88 12 5.44 -2(2) Continued weak loan demand, together with the more rapid growth of demand and other time deposits, permitted banks to reduce reliance on nondeposit sources of funds and to let CD's run off. As a result, the bank credit proxy is now expected to show a slight contraction, on average,over the February-March period. (3) During the inter-meeting period, the Account Manager sought reserve conditions that would be consistent with a gradual easing of the Federal funds rate to around 5¾ per cent, the mid-point of the 5¼-6¾ per cent range agreed upon by the Committee at the February meeting. The Account Manager's task was complicated, however, by the unexpectedly large volume of nonborrowed reserves being released by pre-tax-date attrition in the Treasury's cash balance at Reserve banks. The balance dropped from about $3¾ billion in late February to an overdraft position of more than $1 billion last Wednesday. In the most recent statement week, the drop in the balance exceeded expectations. As a result, despite $4.6 billion of matched sale-purchase transactions arranged by the Desk on Tuesday and Wednesday, the average Federal funds rate fell to just under 4 per cent on the final day of the statement week, reducing the weekly average to only 5.44 per cent. Because of repeated Desk actions to absorb reserves thus far in March, and market awareness of reserve management problems arising from the squeeze on Treasury cash prior to mid-March tax receipts, this latest drop in the funds rate has not been generally interpreted as a signal of further policy easing. -3(4) Short-term market interest rates have shown mixed changes since the February FOMC meeting. While private short-term rates have dropped on balance by about 25 basis points--in response to the further decline of the Federal funds rate--Treasury bill yields have risen 10-20 basis points, with the 3-month issue trading most recently around 5.40 per cent. The general slowing of declines in short-term rates has been attributable in large measure to market expectations that the recent pick-up in growth of the monetary aggregates may constrain further declines in the funds rate. The continuing weakness in loan demand and relatively low level of short-term rates has, nevertheless, induced most large banks to reduce their prime lending rates to 8 per cent, and several banks have moved to 7¾ per cent--the lowest level since June 1973. (5) Bond yields have backed up as much as 40 basis points during the inter-meeting period, reflecting the continued heavy volume of new issues, and the apparent loss of downward momentum in short-term rates. While yields on new corporate bonds resisted the general advance for a time, most recently they too have shown substantial upward adjustments. A special factor influencing municipal yields in the period was increased investor caution emanating from the continuing financing problems of New York City and the special difficulties of the New York State Urban Development Corporation. Treasury yields were affected by the Treasury's February 24 announcement of financing plans that involved about $7 billion of new money to be raised by mid-April through five separate auctions of coupon issues. Although the volume of money to be raised came as no great surprise to the market, the exclusive focus on coupon issues was not anticipated. The first two auctions--involving $1¾ billion of 6-year 8-month notes, and $1½ billion of 14-month notes--have just been completed and -4attracted good bidding interest. As a result, yields on longer-term Treasury issues have recently stabilized. (6) Savings inflows to nonbank thrift institutions showed additional strength in February, as market rates declined and Federal income tax refunds exceeded usual proportions. The thrift institutions have used these improved flows largely to rebuild liquidity and pay down borrowings. However, conditions in mortgage markets have recently shown further improvement; non-rate terms on mortgages reportedly have eased somewhat, and average rates on conventional mortgages at selected S&L's edged down to about 9 per cent in early March--20 basis points below early February and roughly 100 basis points below last fall's peak. (7) The table on the following page shows (in percentage annual rates of changes) 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 last-month-of-quarter basis. Projected figures on the two bases are shown in Appendix table IV for the alternatives presented in the next section. -5Past Calendar Twelve Year Months Past Six Months Past Three Months Past Month 1974 Feb.'75 over Feb.'74 Feb.'75 over Aug.'74 Feb.'75 over Nov.'74 Feb.'75 over Jan.'74 8.6 6.1 -.3 -1.3 -27.0 10.8 9,6 19.8 11.7 -18.8 8.9 7.5 .6 4.7 4.0 2.3 .1 7.2 M2 (M plus time deposits at commercial banks other than large CD's) 7.4 6.9 6.3 5.3 9.9 M 3 (M plus deposits at thrift institutions) 6.7 6.7 6.7 7.1 10.4 9.1 8.7 7.9 9.2 8.9 10.8 9.9 8.0 8.5 7.4 10.2 9.1 3.4 3.7 -- 8.3 6.3 -1.3 -.6 3.0 2.2 2.0 .3 2.2 .3 -.7 -.1 Total reserves Nonborrowed reserves Reserves available to support private nonbank deposits - -6.4 Concepts of Money (currency plus demand deposits) J1 M M 4 (M, plus credit union shares and CD's) M2 (M2 plus CD's) Bank Credit Total member bank deposits (bank credit proxy adj.) Loans and investments of commercial banks 2/ Short-term Market Paper (Monthly average change in billions) Large CD's Nonbank commercial paper .4 1/ Other than interbank and U.S. Government. 2/ Based on month-end figures. 1.4 .4 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 (8) 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 Range of tolerance for March-April M1 5-7 44-6k 4-6 M2 8-10 7*9% 7-9 RPD 34-5k 2 k-4k 1j-3k 4k-5k 5k-6k 6-7 Federal funds rate (inter-meeting range) Longer-run growth ratesM1 4k 6 8 Dec.'74-June'75 Dec.'74-Sept.'75 Feb. - Sept. 4 5k 7 3k 41 6 84 9 9k 7% 7% 8 M2 9 10 11 Dec.'74-June'75 Dec.'74-Sept.'75 Feb. - Sept. 1/ Figures shown assume staff GNP projections through the third quarter, and Federal funds rate behavior as described in the paragraphs below. (9) Of the three alternatives presented, alternative A most closely approximates the longer-run growth rates that accompanied the specifications chosen by the Committee at its last meeting. It includes growth in M1 at a 6 per cent annual rate over the first nine months of the year. This implies, as is shown, an 8 per cent annual rate of growth over the -6aAlternative Longer-Run Growth Rates for Key Monetary Aggregates M1 1975 Feb. Mar. Apr. June Sept. Alt. A Alt. B Alt. C 283.9 285.6 286.7 290.5 297.3 283.9 285.5 286.5 289.9 295.7 283.9 285.4 286.3 289.2 293.9 Alt. A Alt. B Alt. C 621.1 625.7 630.3 642.2 661.3 621.1 625.6 629.9 640.3 656.3 621.1 625.5 629.5 638.1 650.0 Alt. A Alt. B Alt. C 967.9 976.8 986.3 1007.6 1039.2 967.9 976.7 985.8 1005.1 1032.6 967.9 976.5 985.0 1001.4 1022.8 Growth Rates 1st Q. 2nd Q. 3rd Q. Feb.-Sept. 1975 Mar. Apr. 1975 Feb. Mar. Apr. June Sept. 1.8 6.9 9.4 8.1 1.7 6.2 8.0 7.1 1.5 5.3 6.5 6.0 7.2 4.6 6.8 4.2 6.3 3.8 Alt. A Alt. B Alt. C 1088.2 1093.8 1102.8 1123.9 1157.3 1088.2 1093.7 1102.3 1121.4 1149.8 1088.2 1093.5 1101.8 1119.1 1143.0 7.4 7.4 9.4 10.0 9.7 7.3 8.1 7.5 8.0 9.1 12.6 12.5 12.6 9.9 8.9 8.7 8.2 8.5 7.7 11.0 11.7 Alt. A Alt. B Alt. C 713.3 713.3 713.3 714.3 714.2 714.1 718.2 729.3 749.3 717.8 727.4 743.4 717.7 10.5 11.9 11.1 9.1 11.6 9.1 10.2 10.9 11.5 8.5 9.7 10.9 11.2 10.7 10.4 Credit Proxy Alt. A Alt. B Alt. C 726.3 495.8 495.3 498.6 506.5 740.1 523.2 495.8 495.2 498.4 505.0 518.1 495.8 495.2 498.4 504.4 516.1 Growth Rates 1975 1st Q. 2nd Q. 3rd Q. Feb.-Sept. Mar. Apr. 7.8 11.0 11.9 10.9 6.2 9.9 7.8 10.1 10.1 9.7 7.7 9.4 8.5 8.6 5.5 8.4 11.0 8.7 5.4 7.4 8.8 7.2 5.4 6.8 7.6 6.4 6.1 9.4 5.8 9.1 1.7 6.6 1.5 6.0 1.3 6.0 0.8 9.0 9.5 7.7 0.7 7.4 9.3 7.0 -1.2 8.0 -1.5 7.8 -1.5 7.8 13.2 0.7 7.9 10.4 -7forthcoming 7 month period from February to September. Growth rates in the other monetary aggregates are somewhat larger than the earlier specifications because of shifting relationships among the various forms of liquid assets. (10) Under alternative A, a further decline in the Federal funds rate to around 5 per cent--the mid-point of the 4½-5½ per cent range shown--would be anticipated over the next few weeks. This reflects staff expectations of continued near-term weakness in economic activity and in the transactions demand for money during the second quarter. There- after, without any further decline in the Federal funds rate, the sharp rebound in economic activity projected for the third quarter is expected to lead to a rapid rate of growth in M 1 during the summer--large enough to bring growth for the first nine months of the year up to a 6 per cent annual rate. Given the rapid summer growth needed to attain a 6 per cent rate over the nine month period, the funds rate and other interest rates would likely need to rise fairly sharply in the late summer and fall if the Committee wishes to maintain M 1 growth in the period after September at around the 6 per cent annual rate. (11) Consumer-type time and savings deposits at banks and thrift institutions would also be likely to expand somewhat more rapidly than in recent months under alternative A, given the further decline in market interest rates that is assumed. Meanwhile, banks may continue to let large CD's run-off, at least until around mid-year, reflecting the weakness in private credit demands, cautious bank management attitudes, and the increased availability of demand deposits as well as other time deposits. As a result, broader monetary aggregates excluding large -8CD's (M2 and M3) would be expected to show more rapid growth over the next few months than their counterparts including large CD's (M2 and M4, respectively). (12) Alternative B shows the pattern of monetary aggregates that would be associated with little change in money market conditions from those recently prevailing. on 5¾ per cent. The Federal funds rate range centers Growth rates in key monetary aggregates would, of course, be slower than under alternative A--as indexed by a 7 per cent annual growth rate in M 1 over the seven month February-September period and a 5¼ per cent growth rate over the first nine months of the year. (13) Market interest rates probably would rise somewhat over the weeks ahead under alternative B. The Treasury will continue to raise sizable amounts of new cash, including continued cash additions to weekly bill auctions, and dealer positions in Treasury issues are relatively high. Moreover, the calendar of new corporate and municipal issues remains exceptionally large. 5 Stabilization of the funds rate around per cent would likely be taken by the market as evidence that the Federal Reserve was no longer seeking actively to ease credit markets. Thus, unless the economy turned out to be considerably weaker than currently projected, the weight of Treasury and corporate long-term credit demands would tend to exert upward pressure on market rates. (14) Upward interest rate pressures would nonetheless be limited by maintenance of the funds rate at the 5¾ per cent level. That rate is still below rates on short-term market instruments other than Treasury bills. With upward rate pressures limited, inflows of consumer- type time and savings deposits to banks and thrift institutions would probably be well maintained. Thus, mortgage market conditions would -9continue to ease, and bank prime loan rates might drop a little further, particularly since most banks are still at 8 per cent or above. (15) Alternative C indicates growth paths for the monetary aggregates intended to be consistent with some tightening of money market conditions over the weeks ahead, A rise in the funds rate back above 6 per cent--as is contemplated in this alternative--would very likely initiate a sharp upward adjustment in yields on Treasury securities and a turn-around, though perhaps less marked, in other market rates. Upward rate pressures might be fairly severe for a time in corporate and municipal bond markets, in view of the large volume of new issues currently overhanging the market and the possibility that investors would hold back pending clarification of Federal Reserve intentions. With market interest rates rising, the rate of growth in consumer-type time and savings deposits at banks and thrift institutions would begin to diminish. And with the change in prospects for savings inflows, mortgage market conditions would not be likely to ease much, if any, further. (16) Turning to the behavior of M1 in the March-April period, expansion is indicated to be in a 4½-6½ per cent range, given prevailing money market conditions (typified by a 5¾ per cent funds rate) as called for by alternative B. Near-term growth, of course, would be somewhat more rapid under the easier money market conditions of alternative A and somewhat less rapid under the tighter conditions of alternative C. Money growth rates, in general, are expected to accelerate by early summer when tax rebates are added to the public's cash and time deposit holdings (assuming prompt passage of a tax reduction bill). And, as noted earlier, trans- actions demands for cash balances are likely to intensify in summer as -10GNP strengthens. We would expect that the acceleration in money growth would be relatively modest under alternative C, however, since rising interest rates would be working to restrain money demand. -11- Proposed directive (17) 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. Alternative A To implement this policy, while taking account of develop- ments in domestic and international financial markets, the Committee seeks to achieve bank reserve and money market conditions consistent with SUBSTANTIALLY 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 developments in domestic and international financial markets, 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 C To implement this policy, while taking account 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. CHART 1 CONFIDENTIAL(FR) CLASS II-FOMC 3/14/75 RESERVES AVAILABLE TO SUPPORT PRIVATE NONBANK DEPOSITS BILLIONS OF DOLLARS 38 2½% growth for Teb -M ar 36 \4% grov \ 34 I 32 N D J 1974 1-2 : II LI I M J 1974 I t[ !I] S D M J 1975 S D RPD series has been adjusted to remove discontinuities associated with changes in reserve requirement ratios F 1975 5< CONFIDENTIAL(FR) CLASS II-FOMC CHART 2 3/14/75 MONETARY AGGREGATES NARROW MONEY SUPPLY M1 BILLIONS OF DOLLARS 300 280 ,260 I III I I I I I I IIII(IIIIII~IIIII I I I I I I 111 I I I BROADER MONEY SUPPLY M2 860 \- 640 620 00 580 - 560 J 1 lJ 1974 J4 J I I I 1975J 1975 j 1974 1975 3/14/75 CHART 3 MONETARY AGGREGATES ADJUSTED CREDIT PROXY BILLIONS OF DOLLARS 520 - -500 480 - 1-40 I I J I 0 BILLIONS OF DOLLARS 39 - 37 TOTAL 35 33 S, I 1974 Total and nonbo-rowed reserve series "av- I " I 1975 been adjusted to remove discontinuities associated with changes in reserve requirement ratios 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 FUNDS -1 10 BILLIONS OF DOLLARS -1 4 1974 1875 1974 1975 1974 1975 PER CENT TABLE CONFIDENTIAL (FR) CLASS II - FOMC 1 MARCH 14, BANK RESERVES (ACTUAL AND CURRENT PROJECTIONS) SRESERVES AVAILABLE FOR PRIVATE NONBANK DEPOSITS ----------------I NSA SA - ---------------------- ------- -- - I REQUIRED RESERVES ------------------ AGGREGATE --------- RESERVES ------- ----------TOTAL RESERVES SEASONALLY ADJUSTED ------------------------------------GOVT AND CD'S AND OTHER PRIVATE NPNBORROWED ( INTERBANK NON DEP TIME DEP I DEMAND RESERVES &#45;&#45;&#45; ---------- ----- ------- - - -~ - (1) 12) 43) 141 (5) 16) 17) 18) 33,423 33,631 35,584 34,857 19,440 9,039 4,675 2,173 33,423 33,245 (33,306) 34,415 33,239 133,046) 35,820 35,015 (34,962) 35,421 34,867 (34,888) 19,199 19,108 119,191) 99113 9,027 9,100) 4.97C 4,912 4,7491 MONTHLY LEVELS-$MILLIONS 1974--DEC. 1975--JAN. FFE. MAR. ( ( 2,391 1,768 4 1.656) PERCENT ANNUAL GROWTH QUARTERLY 1974--2ND OTR. 3RD QTR. 4TH OTR. 197'--1ST OTR. ( 19.1 9.1 0.8 20.5 8.3 3.6 -1.41) -7.0) 6.6 1I.6 -0.1 5.6 35.9 0.4) ( 2.2 0.0 5.3 f -5.1) 9.7 11.0 6.5 6 2.7) MONTHLY 1974--DEC. 1975--JAN. FEB. MAR. FEB.-MAR. ( 0.0 -6.4 2.2) 6 6 -2.1) ( -14.4) 8.0 -27.0 -1.81 34.7 8.3 5.2 ( 19.4 -18.8 0.7) 1 -14.9 -5.7 5.2) ( 9.8 -11.3 9.7) 4 -9.0) 1 -0.3) ( -0.9) WEEKLY LEVELS-$MILLIONS -- JAN. 15 22 29 33,395 33,569 33,358 34,616 34,816 34,296 36,003 36,123 35,616 35,394 35,529 35,474 19,360 19,259 19,067 9,083 9,126 9,147 4,,96 5,003 4,980 2,606 2,550 2,248 FEB. 5 12 19 26 33,413 33,135 33,151 33,286 34,035 33,066 33,132 32,987 35,541 34,859 35,014 34,790 35,443 34,769 34,785 34,610 19,00E 19,112 19,129 19,157 9,101 9,050 8,945 9,032 4,915 4,918 4,919 4,920 2,121 1,721 1,863 1,504 FAR. 5 12 33,393 33,298 33,109 32,773 35,031 34,643 34,961 34,781 19,106 19,177 9,035 9,090 4,824 4,769 1,639 1,544 -----------------------------------------'--~----'"---~-------------------"--- - - ------NOTE: RESERVE SERIES HAVE BEEN ADJUSTED TO REMOVE DISCONTINUITIES ASSOCIATED WITH CHANGES IN RESERVE REQUIREMENT RATIO. DATA SHOWN IN PARANTHESES ARE CURRENT PROJECTIONS. AT T.,F FOHC MEETING OF FEBRUARY 19, 1975 THE COMMITTEE AGREED ON A RPD RANGE OF .025 TO 2.25 PERCENT FOR THE FEBRUARY-MRCH PERIOD. 1975 CONFIDENTIAL (FR) CLASS II - FOMC TABLE 2 MARCH 14, 1975 MONETARY AGGREGATES (ACTUAL AND CURRENT PROJECTIONS, SEASONALLY ADJUSTED) I PERIOD I MONEY SUPPLY NARROW BROAD (M1) (M2) I I I I ADJUSTED CREDIT PROXY (2) MONTHLY I I I I I U.S. GOVT. I DEPOSITS TIME AND SAVINGS DEPOSITS OTHER TOTAL THAN CD'S CD'S (4) (3) (5) (6) 330.0 I NONDEPOSIT SOURCES OF I FUNDS (8) (7) LEVELS-SBILLIONS 1974--DEC. 284.3 614.3 494.3 1.9 420.3 1975--JAN. FEB. MAR. 282.2 283.9 (285.5) 616.0 621.1 (625.4) 495.8 495.8 (495.2) 0.7 0.6 0.5) 426.7 429.4 (428.7) ( 8.4 90.3 92.9 92.2 ( 8.8) 333.8 337.2 (339.9) ( PERCENT ANNUAL GROWTH QUARTERLY 1974--2ND QTR. 3RD OTR. 4TH QTR. 20.4 6.7 4.2 1975--1ST QTR. ( 1.7) ( 7.2) ( 0.7) 78.2 17.2 25.9 21.3 9.1 12.6 I 8.0) ( 12.0) ( -6.6) MONTHLY 1974--DEC. 2.1 1975--JAN. FEB. MAR. ( -8.9 7.2 6.6) ( 7.0) FEB.-MAR. WEEKLY 2.5 2.9 16.2 f 3.3 9.9 8.3) ( 9.2) ( 3.6 0.0 -1.5) ( I -0.7) I 13.8 12.2 ( 9.6) 18.3 7.6 -2.0) 2.8) ( 11.0) 67.4 34.6 -9.0 ( -44.3) ( -26.5) LEVELS-$BILLIONS 22 29 282.2 282.4 281.4 616.3 616.3 616.0 496.6 495.9 495.0 427.0 426.7 427.4 334.0 334.0 334.6 92.9 92.7 92.8 FEB. 5 12 19 26 281.8 284.2 283.6 284.7 616.8 621.2 621.0 623.4 494.3 495.5 496.0 497.2 427.9 430.0 429.8 430.1 335.0 337.1 337.4 338.7 93.C 92.9 92.3 91.3 MAR. 5 P 12 PE 285.1 285.6 623.9 624.9 494.8 496.3 428.9 428.1 338.7 339.1 90.2 88.9 JAN. 15 ------------------------------------------------------------ NOTE: ------ DATA SHOWN IN PARENTHESES ARE CURRENT PROJECTIONS. -------- ------------------------------------------------------------------ P PE - PRELIMINARY PARTIALLY ESTIMATED 7.6 6.5 6.3) CONFIDENTIAL (FR) CLASS II - FOMC MARCH 14, 1975 TABLE 3 RESERVE EFFECT OF OPEN MARKET OPERATIONS AND OTHER RESERVE FACTORS (Millions of dollars, not seasonally adjusted) pen ilrket Operations 1/ f Bills Coupon Agency RP's & Accept. Issuea Isues Net 3/ (3) (4) (1) (2) Total (5) Daily Average Reserve Effects 2/ Open Market A Member Other 4, Operations Bank Borrowing Factors (8) (6) (7) A in reserve categories I1 Target req. res. against available res. 5 available U.S.G. and interb (6)+(7)+(8)-(9) reserves 5/ (11) (10) (9) Monthly 1974--Aug. Sept. 862 -594 -176 235 191 2,225 549 3,322 322 141 -32 39 -60 -464 99 -450 -67 166 74 180 375 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 -2,395 177 -183 66 -314 204 -81 315 395 450 -1,102 -1,015 421 316 -14 295 1,082 714 388 309 -636 -1,241 -313 -243 1,500 -599 257 -394 294 -1689 965 -670 -495 294 93 295 -141 -490 449 -369 600 199 -535 1975--Jan. Feb. Mar. April Weekly 1975--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 -452 947 1,891 1,462 -592 -887 Feb. 5 12 19 26 -299 -1,091 -298 384 -316 -38 ---43 -2,271 3,612 -2,186 2,496 -2,608 2,521 -2,484 3,152 -689 -1,899 471 1,144 -44 -7 138 -48 467 961 -1,520p -1,623p 10 42 4p -338p -276 -987 -915p -189p 1975--Mar. 5 12 19 26 19 -289 376 -2 -4,202 -3,417 -3,807 -2,666* 193 -3,025** 108p , 7 2 1p 68p 27p 12 3 p -340p 1/ 2/ 3/ 4/ 5/ -1,042* -110 -9 2 Represents change in System's portfolio from end-of-period to end-of-period; includes redemptions in regular bill auctions. 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 nonbank deposits. Target change for Feb. and Mar. reflects the target adopted at the Feb. 19, 1975 FOMC meeting. Target change for previous months reflects the bluebook patterns that are consistent with target ranges that were adopted during the month. Special certificate (Direct Treasury borrowing from P.R.). *Reflects special certificate purchase. CONFIDENTIAL (FR) CLASS II - FOMC MARCH 14, 1975 TABLE 4 SECURITY DEALER POSITIONS AND BANK POSITIONS (Millions of dollars) U.S. Govt. Security Dealer Positions Period Bills (1) Coupon Issues (2) Dealer Positions Corporate Municipal Bonds Bonds (3) (4) Excess** Reserves (5) Member Bank Reserve Positions Borrowing at FRB** Basic Reserve Deficit Total Seasonal 8 New York 38 Others (6) (7) (8) (9) 1973--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 1974--High Low 3,678 -289 2,203 -309 253 0 384 27 628 -168 3,906 647 176 13 -7,870 -2,447 -12,826 - 6,046 1974--Feb. Mar. 2,436 1,986 1,619 583 120 68 263 239 184 134 1,162 1,314 17 32 -5,262 -5,030 -10,769 -11,058 Apr. May June 1,435 408 580 99 85 9 39 142 66 78 83 124 182 178 204 1,736 2,590 3,020 40 102 134 -3,952 -3,171 -4,445 -11,603 - 9,091 - 9,920 July Aug. Sept. 457 1,758 2,309 -214 398 552 14 33 23 79 103 85 162 197 180 3,075 3,337 3,282 149 164 139 -3,522 -4,231 -4,235 - 9,555 - 9,224 - 8,250 Oct. 2,174 654 25 166 197 1,813 117 Nov. Dec. -4,602 2,900 2,985 1,608 1,836 - 8,689 83 175 268 149 205 258 1,252 727 67 32 -6,322 -5,960 - 9,715 -10,169 1975--Jan. Feb. 2,501 *3,329 2,050 *2,121 97 144 79 166 147 216p 398 147p 14 lip -5,378 -6,318 - 9,744 9,533 1975--Jan. 1 8 15 22 29 2,234 2,487 3,351 1,586 2,308 2,507 2,845 2,036 1,619 1,615 163 14 174 130 6 117 75 88 66 48 577 137 -42 186 174 561 311 609 594 142 22 19 13 12 10 -4,771 -5,218 -5,633 -5,853 -4,713 - 9,016 -10,332 -10,677 - 9,616 - 8,504 Feb. 5 12 19 26 2,739 3,555 *3,644 *3,335 2,178 1,863 *1,699 *2,607 0 59 128 244 105 203 192 165 395 59 158 177p 98 90 229 180p 11 10 12 lip -5,652 -7,138 -6,439 -5,866 - 8,653 - 9,074 -10,184 - 9,961 Mar. 5 12 19 *3,146 *3,215 *2,249 *2,159 266 39 9p 117 150p 428 p 258p 70p 61p 9p 7p -5,720p -7,4 66p - 9,27 1p -11,37 6 p 26 NOTE: Government security dealer trading positions are on a commitment basis. Tradin positions, which exclude Treasury bills financed repurchase by agreements maturing in 16 days or more, are indicators of dealer holdings available for sale over the near-term. Other security dealer positions issues still in syndicate, excluding trading positions. The basic reserve deficit is excess reserves less borrowing at Federal funds purchases. Weekly data are daily averages for statement weeks, except for corporate and municipal issues Federal Reserve less net 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) MARCH 14, 1975 TABLE 5 SELECTED INTEREST RATES Per cent Lon -Term Short-Term Treasury Bills Period 90-119 Day Commercial Paper (1) 1-year (3) 1973--High Low 10.84 5.61 8.43 5.42 10.50 1974--High Low 13.55 8.45 9.54 6.39 12.25 1974--Feb. Mar. 8.97 9.35 6.51 7.34 Apr. May June 10.51 11.31 11.93 8.08 8.21 8.16 July Aug. Sept. 12.92 12.01 11.34 Oct. Nov. Dec. Federal Funds 90-Day (4) CD's New Issue-NYC 60-89 Day (5) 90-119 Day (6) Aaa Utility New Recently Offered Issue (8) (7) Municipal Bond Buyer (9) U.S. Government (10-yr. Constant Maturity) FNMA Auction Yields (1u) 10.50 5.38 10.75 8.52 5.50 7.29 8.30 7.26 5.59 4.99 7.54 6.42 9.37 7.69 12.25 8.00 12.00 7.88 7.88 10.61 8.05 10.52 8.14 7.15 5.16 8.14 6.93 10.59 8.43 8.00 8.09 8.12 8.46 5.20 5.41 6.96 8.69 7.97 8.56 8.23 8.64 7.21 8.48 8.53 9.92 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 10.82 11.18 6.02 6.13 7.51 7.58 7.54 9.07 9.41 9.54 8.04 8.88 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 7.81 9.84 6.69 6.76 8.04 8.04 10.25 10.58 10.06 9.45 8.53 7.59 7.29 6.79 9.55 9.35 8.78 9.00 9.33 8.72 8.84 10.16 9.21 9.53 10.23 9.34 9.56 6.57 7.90 7.68 7.43* 10.22 8.95 9.18 1975--Jan. Feb. 7.13 6.24 6.27 5.56 7.39 6.36 7.43 6.00 7.45 6.25 9.36 9.45 9.09 6.82 6.39 7.50* 9.25 8.97 7.39* 8.93 1975--Jan. 7.35 7.70 7.22 7.17 6.99 6.69 6.56 6.44 6.33 5.91 9.34 8.43 7.73 7.18 6.55 9.00 9.00 7.75 7.25 6.75 6.25 6.54 7.41* 7.38* 7.51* 7.57* 7.58* 9.47 7.88 5 12 19 26 6.46 6.28 6.29 6.15 5.65 5.58 5.46 5.59 6.60 6.38 6.38 6.25 5 12 19 5.88 5.44 5.70 5.64 6.25 6.18 5.63 5.58 6.25 6.00 Feb. Mar. 5.63 8.44 6.61 7.05 9.67 7.08 9.45 7.38 6.63 6.50 9.62 9.38 9.45 9.00 6.99 6.90 6.59 6.00 6.00 6.00 6.00 6.25 6.25 6.25 6.25 8.89 9.02 9.04 8.94 9.12 9.10 9.08 9.06 6.34 6.27 6.40 6.55 7.42* 7.42* 7.27* 7.44* 6.00 6.13 8.91 5.88 6.13 9.27p 9.17 9.33p 6.54 6.65 7.50* 7.58p* 9.55 9.47 9.21 9.87 9.53 9.37 9.12 8.98 8.87 8.78 26 Daily--Mar. 6 13 NOTE: * 5.70 5.48p 5.53 5.40 II _ 7.49* n.a. 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 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. The Treasury has revised its procedure for computing the constant maturity yields. Data have been revised Back through December 1974 and result in an average increase of about 8 basis points in the level of the 10 year yield. Appendix Table 1 RESERVES AND MONETARY VARIABLES RESERVES MONEY STOCK BANK CREDIT MEASURES MEASURES Available Period Total 1 to NonSupport borrowed Private Deposits 2 3 M1 4 M2 5 March 14, 1975 M 3 6 Adjusted Credit Proxy 7 OTHER Total Ti m e Loans and Investments Total Time 8 9 Tht Other Than CD's Thrift Institution Deposits 10 11 12 Nondeposit Funds Funds 13 U.S. Gov't. Demand 14 (Dollar change in billions) (Per cent annual rates of growth) Annually: 1972 1973 1974 CD' 10.9 7.8 8.6 7.7 7.2 10.8 10.2 9.2 8.9 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 5.5 10.4 19.9 26.5 -0.6 2.3 1.8 Semi-anuallY: 1st Half 1973 2nd Half 1973 6.4 8.8 1.2 13.2 9.8 8.2 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 10.9 5.9 0.5 21.0 12.6 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 5.0 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 20.5 8.3 3.6 1.1 T0.1 5.6 35.9 5.8 19.1 9.1 0.8 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 6.7 4.2 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 6.8 4.2 13.3 3.5 5.5 0.9 0.9 0.2 -0.2 -0.7 2.1 1.0 -4.4 Monhthly: 1974--Jan. Feb. Iar. Apr. Hay June July Aug. Sept. Oct. ffov. Dec. 32.9 -23.7 -4.6 31.3 21.8 7.5 21.7 -3.9 7.0 -3.1 -1.7 15.6 43.6 -29.6 -9.4 16.6 -9.1 -7.6 12.5 -5.6 9.8 51.7 18.3 34.7 6.5 2.7 8.2 19.2 21.5 15.7 8.6 10.8 7.8 -1.5 -2.8 6.6 -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 4.9 12.3 2.9 9.2 29.6 16.9 13.6 9.2 6.4 4.2 -0.2 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 8.9 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 1975--Jan. Feb.p 8.0 -27.0 19.4 -18.8 0.0 -6.4 -8.9 7.2 3.3 9.9 5.8 10.4 3.6 -- 8.2 3.0 18.3 7.6 13.8 12.2 10.2 11.2 2.6 -0.7 -0.8 -1.1 -1.2 -0.1 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/ Based on data adjusted for changes in reserve requirements. 2/ 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. -0.2 -1.7 -2.0 March 14, 1975 Appendix Table 2 RESERVES AND MONETARY VARIABLES SEASONALLY ADJUSTED, BILLIONS OF DOLLARS RESERVES Period MONEY STOCK MEASURES Available Nonto Total b wed Support TotalPvt Deposits BANK REIT MEASURES 1 Total Pvt Dep M2 CAdi Credit Proxy Total Loans and Investments 7 8 9 M3 OTHER Total Time Other Thrift Insti CD's Deposits 11 12 Non S CD's deposit Funds Gov't Demand 13 14 15 1 2 3 4 5 28,931 31,714 28,609 30,037 26,727 29,601 255.8 271.5 198.9 209.9 525.7 572.2 823.3 895.0 406.4 448.7 559.0 634.6 313.8 364.5 269.9 300.7 297.5 322.8 43.9 63.8 4.3 6.6 5.6 3.9 1974--Jan. Feb. Mar. 33,660 32,996 32,870 32,609 31,805 31,556 30,850 30,920 31,131 270.9 273.1 275.2 208.9 210.4 211.9 575.5 580.9 585.5 900.4 907.5 914.6 453.3 454.4 457.9 643.3 652.4 662.4 371.0 376.0 378.3 304.6 307.8 310.3 324.9 326.6 329.2 66.4 68.2 68.0 6.5 6.9 7.5 5.1 2.2 3.2 Apr. May June 33,728 34,340 34,556 31,992 31,750 31,550 31,628 32,194 32,616 276.6 277.6 280.0 212.8 213.3 215.4 589.4 591.6 597.1 920.2 922.8 929.6 469.2 475.8 481.2 672.3 679.1 682.9 386.7 392.5 398.4 312.7 314.0 317.1 330.8 331.2 332.4 73.9 78.5 81.3 8.1 8.8 8.4 4.6 5.6 5.3 July Aug. Sept. 35.180 35,066 35,270 31,879 31,730 31,988 32,850 33,145 33,360 280.5 280.7 281 1 215.7 215.3 215.3 599.7 602.2 603.8 933.4 936.4 938.8 484.9 487.5 489.2 692.0 697.3 692.3 402.8 405.2 407.5 319.2 321.5 322.7 333.7 334.2 335.0 83.6 83.8 84.8 9.2 9.0 8.6 4.2 6.2 6.3 Oct. Nov. Dec. 35,179 35,128 35,584 33,366 33,876 34,857 33,318 33,241 33,423 282 2 283.8 284.3 215.7 216.5 216.6 608.1 613.0 614.3 944.4 951.1 955.0 488 3 491.2 494 3 692.3 693.4 686.0 412.1 414.7 420.3 325.9 329.2 330.0 336.2 338.2 340.7 86.2 85.5 90.3 7.9 7.6 8.4 3.7 4.6 1.9 35,820 35,015 35,421 34,867 33,423 33,245 282.2 283.9 214.1 215.3 616.0 621.1 959 6 967.9 495 8 495.8 690.7 692.4 426.7 429.4 333.8 337.2 343.6 346.8 92.9 92.2 7.6 6.5 0.6 6 10 Annually Dec. Dec 1972 1973 Monthly. 1975--Jan. Feb. p 0.7 1 8 15 22 29 36,193 35,563 36,003 36,123 35,616 35,632 35,252 35,394 35,529 35,474 33,778 33,324 33,395 33,569 33,358 284.3 282.2 282.2 282.4 281.4 216.5 214.3 214.1 214.1 213.0 615.1 614.5 616.3 616.3 616.0 -- 494.9 495.6 496.6 495.9 495.0 ----- 423.9 425.7 427.0 426.7 427.4 330.8 332.4 334.0 334.0 334.6 ----- 93.1 93.3 92.9 92.7 92.8 8.2 8.1 7.4 7.6 7.3 -1.9 1.6 0.1 Feb. 5 12 19p 26p 35,541 34,859 35,014 34,790 35,443 34,769 34,785 34,610 33,413 33,135 33,151 33,286 281.8 284.2 283.6 284.7 213.6 215.6 214.8 215.9 616.8 621.2 621.0 623.4 ----- 494.3 495.5 496.0 497.2 ----- 427.9 430.0 429.8 430.1 335.0 337.1 337.4 338.7 ----- 93.0 92.9 92.3 91.3 6.7 6.4 6.5 6.5 0 1 0.1 0.8 1.3 Mar. 5; 35,031 34,961 33,393 285.1 216.3 623.9 - 494.8 -- 423.9 338.7 - 90.2 6.1 0.9 975--Jan. NOTES: 1/ p - Estimated monthly average levels derived by averaging end of current month and end Eurodollar borrowings are included beginning October 16, 1969, and requirements on October 1, 1970. Adjusted credit proxy includes mainly total member bank deposits Weekly data are daily averages for paper and Eurodollar borrowings of U.S. banks. Weekly data for nonbank commercial paper figures which are for last day of month. thrift institution deposits. Preliminary. of previous month reported data. Reserve requirements on bank-related commercial paper are included beginning subject to reserve requirements, bank-related commercial Monthly data are daily averages except statement weeks. total loans and investment and are not available for M3 Appendix Table III Growth Rate in Money Supply (Per cent change at an annual rate) M1 1973 1974 M2 M Q M Q M Q I 3.4 6.8 7.3 9.1 8.5 10.2 II 11.3 7.3 10.6 8.6 10.3 8.9 III 0.6 5.5 5.6 7.8 5.2 7.5 IV 8.7 5.0 10.8 8.9 9.8 7.9 I 5.5 5.8 9.3 9.6 8.8 II 7.0 7.3 7.9 8.3 6.6 III 1.6 3.9 4.5 6.2 4.0 IV 4.6 3.7 7.0 6.6 6.9 M = Annual rates of growth calculated from average levels in the final months of the quarters. Q = Annual rate calculated from agerave levels in all three months of the quarters. Appendix Table IV Growth Rates in Money Supply for Alternatives M1 M M3 M2 Q M Q M Q 6.0 9.1 7.5 Alt. A 1975 I 1.8 0.7 II 6.9 6.6 10.5 9.8 12.6 11.9 III 9.4 9.0 11.9 11.9 12.5 11.8 7.4 Alt. B 1975 I 1.7 0.7 7.4 6.0 II 6.2 6.1 9.4 9.1 11.6 11.3 III 8.0 7.8 10.1 10.9 11.3 10.0 9.1 7.5 Alt. C 1975 I 1.5 0.6 7.3 6.0 9.1 II 5.3 5.5 8.1 8.3 10.2 III 6.5 6.5 7.5 7.8 8.5 7.5 10.5 9.1 M = Annual rates of growth calculated from average levels in last months of the quarter. Q = Annual rates calculated from average levels in all three months of the quarters. 

Federal Reserve (1975, March 17). Bluebook. Bluebooks, Federal Reserve. https://whenthefedspeaks.com/doc/bluebook_19750318

@misc{wtfs_bluebook_19750318,
  author = {Federal Reserve},
  title = {Bluebook},
  year = {1975},
  month = {Mar},
  howpublished = {Bluebooks, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/bluebook_19750318},
  note = {Retrieved via When the Fed Speaks corpus}
}