Bluebook

Prefatory Note The attached document represents the most complete and accurate version available based on original copies culled from the files of the FOMC Secretariat at the Board of Governors of the Federal Reserve System. This electronic document was created through a comprehensive digitization process which included identifying the bestpreserved paper copies, scanning those copies, 1 and then making the scanned versions text-searchable. 2 Though a stringent quality assurance process was employed, some imperfections may remain. Please note that this document may contain occasional gaps in the text. These gaps are the result of a redaction process that removed information obtained on a confidential basis. All redacted passages are exempt from disclosure under applicable provisions of the Freedom of Information Act. 1 In some cases, original copies needed to be photocopied before being scanned into electronic format. 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Please note that the numbers and text in charts and tables were not reliably recognized by the OCR process and were not checked or corrected by staff. January 13, Strictly Confidential (FR) 1978 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 January 13, 1978 MONETARY AGGREGATES AND MONEY MARKET CONDITIONS Recent developments (1) M-1 increased at about an 8 per cent annual rate in December, and incoming data suggest that growth over December and January will be at about a 7¼ per cent rate, in the upper half of the FOMC's range. M-2 appears to be increasing at a 6¼ per cent annual rate over the December-January period, near the lower end of its range. As in November, all of the increase in the interest-bearing component of M-2 occurred in large denomination time deposits. Flows into savings and consumer-type time deposits remained weak, apparently reflecting the continued diversion of funds from these deposits to higher yielding market instruments. Deposit flows at thrift institu- tions moderated slightly further in December from November's reduced rate. Commercial bank credit is estimated to have remained about unchanged in December, on a last-Wednesday-of-the-month basis; over the fourth quarter as a whole, bank credit growth was quite strong. Growth in Monetary Aggregates over December-January Period (SAAR in per cent) Ranges Latest Estimates M-1 2½ to 8½ 7.2 M-2 6 to 10 Memo: Federal funds rate (per cent per annum) Through Jan. 6: 6¼ to 6¾ From Jan. 7: 6½ to 7 6.2 Average for statement week ending 21 6.54 28 6.65 Jan. 4 6.69 11 6.58 Dec. (2) Total reserves are projected to be increasing at about a 14 per cent annual rate over December and January, reflecting the pickup in growth of demand deposits and continued strong expansion in large denomination time deposits. Growth in nonborrowed reserves is expected to be even more rapid over this period, as member bank borrowing has declined from its November level. (3) With the monetary aggregates apparently expanding at rates well within the ranges specified by the FOMC, the Account Management continued to aim for a Federal funds rate of around 6½ per cent in the last weeks of December and first week of January. However, reflecting technical factors,including usual window-dressing pressures around year-end Federal funds generally traded at rates above this level. On January 6, the Board approved an increase in the discount rate from 6 to 6½ per cent. On that day, the FOMC also concurred in the Chairman's recommendation to raise the Federal funds rate range to 6½ to 7 per cent and to instruct the Account Manager to raise the funds rate to around 6¾ over the next few days. (4) Short-term market interest rates changed little during late December and early January, though longer-term rates moved up somewhat. After the discount rate was raised and the System increased its Federal funds rate target, however, Treasury bill rates increased sharply and, on balance, are up 35 to 45 basis points for the intermeeting period. At the same time, private short-term rates have increased more modestly. Yields on longer-term market securities have -3risen to 10 to 35 basis points since the last Committee meeting, while rates in the primary mortgage market edged higher. (5) The table on the following page shows (in terms of percentage annual rates of change) related monetary and financial flows over various time periods. 1975 & 1976 Average Past Twelve Months Dec. '77 over Dec. '76 Past Six Months Dec. '77 over June '77 Past Three Months Dec. '77 over Sept. '77 Past Month Dec. '77 over Nov. '77 Nonborrowed reserves 1.5 3.6 6.1 7.4 Total reserves 0.4 5.1 7.8 6.6 7.0 Monetary Base 6.4 8.4 9.7 8.9 9.2 5.1 7.4 8.4 6.1 7.9 M-2 (M-1 plus time deposits at commercial banks other than large CD's) 10.0 8.9 8.7 6.9 5.8 M-3 (M-2 plus deposits at thrift institutions) 12.3 11.1 11.5 9.2 7.3 M-4 (M-2 plus CD's) 7.0 9.7 10.6 11.7 10.6 M-5 (M-3 plus CD's) 10.2 11.4 12.5 12.1 10.2 Month-end basis 6.5 10.4 8.5 8.3 -0.7 Average of Wednesdays 6.2 10.5 9.0 8.7 0.7 -1.1 1.0 1.8 3.8 3.8 0.0 0.2 0.0 0.1 0.8 17.2 Concepts of Money M-1 (Currency plus demand deposits) 1/ Bank Credit Loans and investments of all commercial banks 2/ Short-term Market Paper (Monthly average change in billions) Large CD's Nonbank commercial paper 1/ Other than interbank and U.S. Government. 2/ Includes loans sold to affiliates and branches. NOTE: All items are based on averages of daily figures, except for data on total loans and investments of commercial banks, commercial paper, and thrift institutions --which are derived from either end-of-month or Wednesday statement date 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 (6) Shown below for Committee consideration are three alternative sets of longer-run growth ranges for the monetary aggregates applicable to the QIV '77-QIV '78 period. Alt. A Alt. B Alt. C M-1 4 to 7 4 to 6 4 to 6 M-2 7 to 9 to 9 6 to 8 6 M-3 8 to 11 8 to 10 7 to 10 Bank credit 7 to 10 7 to 10 6 to 9 (7) Alternative B encompasses the ranges for all of the aggregates adopted by the Committee in October for the QIII QIII '78 period. '77- The ranges for M-2 and M-3 now assume an upward adjustment of one-half percentage point in ceiling rates on small denomination time deposits in the first half of the year. Without such an adjustment, the increase in market interest rates thought necessary to restrain M-1 growth to the mid-point of its indicated range would--given associated projections for time deposit flows into banks and thrift institutions--lead to growth in M-2 and M-3 at rates near or below the lower ends of the ranges shown.1 / Alternatives A and C represent, respectively, somewhat more and somewhat less expansive 1/ Without an adjustment in deposit ceiling rates, the ranges for M-2 and M-3 for the QIV '77-QIV '78 period consistent with a 4 to 6 per cent growth in M-1 would be 5 to 8 and 6 to 9 per cent, respectively. Projections of the interest-bearing components of M-2 and M-3,with and without an adjustment in ceiling rates, are shown in Appendix V. (Should the Committee wished to retain the existing M-2 and M-3 ranges without an adjustment in deposit ceiling rates, the staff believes that consistency would require an M-1 range of 5 to 8 per cent and associated lower short-term market rates.) policy alternatives; both also assume the upward adjustment in ceiling rates. (8) The table below provides perspective on the relationship between growth rates proposed for the QIV '77-QIV '78 period and for and 18-month periods also ending in QIV '78. 5- It shows, for instance, that growth in M-1 at around the 5-1/4 per cent mid-point of the proposed alternative B range would lead to a 5.6 per cent annual rate of expansion over the 15-month period starting with QIII '77 and to a 6.3 per cent annual rate of growth over the 18-month period beginning with QII '77--in both cases within the current FOMC range, but above the midpoint. This is the case because of the sizable overshoot in M-1 growth in the third quarter of last year and the slight overshoot in the fourth. M-1 growth at the mid-point of the proposed 4-6 per cent alternative C range would virtually compensate for the slight fourth quarter overshoot, since this would lead to a 5.4 per annual rate of expansion over the 15-month QIII '77-QIV '78 period.1/ Growth Rates in Monetary Aggregates Assuming Growth Over QIV '77-QIV '78 Period at Near Mid-Point of Alternative Ranges (Annual rate, compounded quarterly) Period 1/ Alt. A Alt. B M-1 5.2 5.6 6.3 Alt. C QIV '77-QIV '78 QIII '77-QIV '78 QII '77-QIV '78 5.5 5.8 6.5 Memo: 6.0 5.7 5.4 QIV '77-QIV '78 8.7 M-2 8.3 7.8 QIII '77-QIV '78 QII '77-QIV '78 8.5 8.9 8.2 8.6 7.8 8.3 Memo: 8.4 8.1 7.8 QIII '77-QIII '78 QIII '77-QIII '78 5.0 5.4 6.1 Implications of the proposed alternatives for the monetary aggregates for growth over even more extended periods than those shown in the text table are shown in connection with the growth triangles in Appendix IV. (9) Shorter-run specifications for monetary aggregates and the Federal funds rate believed consistent with longer-run proposals are summarized below for Committee consideration. (More detailed, and longer-term, data are shown in the tables on pp. 8 and 9.) Alt. A Alt. B Alt. C M-1 3 to 9 2½ to 8½ 2 to 8 M-2 5½ to 9 5 to 9 4½ to 8½ 6½ to 7 7 to 7½ Ranges for Jan.-Feb. Federal funds rate (Intermeeting period) (10) 6 to 6½ A Federal funds rate centered on the recently prevailing 6¾ per cent, as encompassed under alternative B, is likely to be associated with M-1 growth over January-February in a 2½ to 8½ per cent annual rate range. However, the staff expects that further increases in market interest rates will be required relatively soon in order to limit growth in this aggregate over the QIV '77 to QIV '78 period to the mid-point of the longer-run 4 to 6½ per cent range associated with alternative B. Money demand can be expected to be relatively strong over the year. Nominal GNP is projected to increase at about an 11¾ per cent rate during 1978, reflecting in part an assumed additional fiscal stimulus from tax cuts. And the restraining effect of the previous increases in interest rates will be diminishing with the passage of time. Moreover, the evidence of the last three quarters suggests that the depressing effect on money demand of regulatory and innovational factors has been wearing off. Consequently, the staff has assumed only some moderate additional downward shift in the demand for money over 1978. Thus, in Alternative Levels and Growth Rates for Key Monetary Aggregates M-1 M-2 Alt. A Alt. B Alt. C Alt. A Alt. B Alt. C 1977 1978 December January February 335.4 337.3 338.8 335.4 337.2 338.5 335.4 337.1 338.2 806.5 811.2 816.6 806.5 810.9 815.7 806.5 810.6 815.4 1977 QIV 334.1 334.1 334.1 802.9 802.9 802.9 1978 QI QII QIII QIV 338.9 343.6 348,1 352.6 338.6 342.8 347.1 351.6 338.4 342.2 346.4 350.9 816.6 834.0 853.9 872.9 816.2 834.2 852.1 869.4 816.2 833.0 849.3 865.9 Growth Rates Monthly: 1978 January February 6.8 5.3 6.4 4.6 6.1 3.9 7.0 8.0 6.5 7.1 6.1 7.1 Quarterly Average; 1978 QI QII QIII QIV 5.7 5.5 5.2 5.2 5.4 5.0 5.0 5.2 5.1 4.5 4.9 5.2 6.8 8.5 9.5 8.9 6.6 8.8 8.6 8.1 6.6 8.2 7.8 7.8 Semi-Annual: QIV '77-QII '78 QII '78-QIV '78 5.7 5.2 5.2 5.1 4.8 5.1 7.7 9.3 7.8 8.4 7.5 7.9 Annual: QIV '77-QIV '78 5.5 5.2 5.0 8.7 8.3 7.8 -9- Alternative Levels and Growth Rates for Key Monetary Aggregates (cont'd) M-3 Bank Credit Alt. A Alt. B Alt. C Alt. A Alt. B Alt. C 1977 1978 December January February 1373.9 1382.9 1392.8 1373.9 1382.7 1391.6 1373.9 1382.1 1389.8 868.7 875.2 882.7 868.7 875.2 882.5 868.7 875.2 882.3 1977 QIV 1365.5 1365.5 1365.5 865.0 865.0 865.0 1978 QI QII QIII QIV 1392.8 1424.1 1459.2 1493.9 1392.1 1423.2 1454.8 1485.9 1391.6 1420.3 1448.5 1477.0 883.4 904.4 924.5 944.1 882.9 903.0 922.0 940.9 882.3 901.9 920.2 938.4 Growth Rates Monthly: 1978 January February 7.9 8.6 7.7 7.7 7.2 7.5 9.0 10.3 9.0 10.0 9.0 9.7 Quarterly Average: 1978 QI 8.0 7.8 7.6 8.5 8.3 8.0 QII QIII QIV 9.0 9.9 9.5 8.9 8.9 8.6 8.2 7.9 7.9 9.5 8.9 8.5 9.1 8.4 8.2 8.9 8.1 7.9 Semi-Annual: QIV '77-QII '78 QII '78-QIV '78 8.6 9.8 8.5 8.8 8.0 8.0 9.1 8.8 8.8 8.4 8.5 8.1 9.4 8.8 8.2 9.1 8.8 8.5 Annual: QIV '77-QIV '78 -10order to constrain M-1 growth, the Federal funds rate under alternative B begins to rise next month and reaches an average of 8 per cent in the fourth quarter, as shown in Appendix I.1/ (11) Under alternative B, growth in M-2 over the January- February period is likely to be in a 5 to 9 per cent annual rate range. With the recent increase in market yields, it appears likely that savings deposits at banks, which were essentially unchanged in the last two months of 1977, will remain weak in the early months of 1978. Moreover, now that yields onmarket instruments are at or above effective ceiling rates on all maturities of small denomination time deposits at banks, growth in such deposits is likely to remain modest at best. But relatively strong growth in large denomination time deposits included in M-2 can be expected as banks offer these instruments aggressively to offset slow growth of deposits subject to Regulation Q ceilings. (12) Thrift institutions too are faced with unfavorable market rate comparisons, except on their 4 and 6 year maturities where the favorable spread has narrowed to only about 5 and 25 basis points respectively, since the last meeting. Consequently, growth in deposits at these institutions can be expected to slow further in January-February. With outstanding commitments at record levels, it seems likely that S&L's will not only be forced to reduce their liquidity and to maintain a high rate of borrowing from the FHLBanks, but also to slow their new commitment activity in early 1978. 1/ The implied increases in the velocity of M-1 and M-2 over 1978 are displayed in Appendix II. -11(13) If the Federal Funds rate remains near its present 6¾ per cent level over the intermeeting period, as envisioned under alternative B, short-term market interest rates will probably remain near current higher levels. And given their increases since November, bond yields may be fully adjusted to the current level of short-term rates. Thus, yields in the corporate and tax-exempt bond markets may remain essentially unchanged, and could even decline somewhat in response to continuing strong institutional investment demands and a recent reduction in new offerings of corporate bonds. However, on January 25, the Treasury will announce terms for refunding more than $5 billion of publicly-held issues maturing in mid-February; the Treasury may also take the occasion to raise $1 to $2½ billion of new money. (14) Beyond the intermeeting period, short-term interest rates are expected to be under renewed upward pressure as efforts are made to limit M-1 expansion to the 5¼ per cent mid-point of the alternative B longer-run range. As short-term rates rise, some further induced increase in intermediate-term rates can be expected. Thus, even with the assumed increase in deposit rate ceilings, inflows to thrifts will probably not be sufficient to enable them to meet their mortgage commitments without further increases in borrowings from the FHLBanks. Under the circumstances, mortgage rates are likely to come under upward pressure. Banks would find it necessary to continue to offer large denomination time deposits in volume to supplement their deposit sources, and to reduce further their portfolio liquidity in order to meet loan demands. Moreover, with -12Treasury, corporate, and municipal bond offerings remaining sizable, long-term yields can also be expected to be under renewed upward pressure. Such increases, however, will be limited by the continued high cash flows of insurance companies and pension funds. (15) Alternative C contemplates an increase in the Federal funds rate over the next few weeks to the mid-point of a 7 to 7-1/2 per cent range. Under this alternative M-1 and M-2 growth over the January-February period may be in respectively. 2 to 8 and 4½ to 8½ per cent ranges, If the Committee followed this course, the 3-month bill rate would likely increase to about 7 per cent between now and the next meeting, with commensurate adjustments in other short rates. Member bank borrowing would begin to rise, and pressures for a discount rate increase would develop. The increase in short-term interest rates under the alternative would tend to strengthen the dollar on international exchange markets. (16) Such adjustments in short-term market conditions, following so closely on recent discount rate and open market actions, would probably be accompanied by a reappraisal of the basic financial outlook by market participants. It is likely that banks and thrift institutions would adopt more restrictive lending policies, while mortgage bankers would take down existing FNMA commitments and aggressively seek new commitments. Pressures for an upward adjustment in ceiling rates on time deposits would be likely to emerge. interest rates would probably rise further. Long-term At the higher level of -13rates, corporate and municipal bond offerings would likely be postponed or possibly cancelled, with borrowers turning more toward banks and the short-term sector of the open market. (17) The tightening of the money market over the next few weeks would be a step toward reducing longer-run growth in the aggregates to rates within the somewhat lower ranges proposed for alternative C. However, further interest rate increases appear necessary as the year progresses, given the underlying strength of money demand. The staff would expect the funds rate under this alternative to average 7-3/4 per cent by the second quarter of 1978 and 8-1/4 per cent in the fourth. (18) An easing in money market conditions over the next few weeks under alternative A, which calls for a Federal funds rate of about 6-1/4 per cent, would come as a considerable surprise so soon after the Board's recent discount rate action. Recent interest rate increases would be reversed, although perhaps not entirely in long-term markets if the rate decline was considered to be temporary. The decline in short-term rates, however, would tend to soften the dollar in international exchange markets. (19) Even though this alternative is consistent with a shift to higher long-term growth ranges for the aggregates, the decline in the funds rate would soon have to be reversed in order to keep the aggregates within the longer-run ranges of alternative A. The funds rate -14would probably have to begin rising late in the first quarter and reach a high of 7-3/4 per cent by fall. The delayed rise in short- term rates would postpone the need for a change in deposit rate ceilings. -15Directive language (20) Given below are alternatives for the operational paragraphs of the directive. The first formulation places main emphasis on near-term rates of growth in monetary aggregates. The second formulation, like the directive adopted at the last meeting, places main emphasis on money market conditions; it shows--in strikethrough form--the specifications adopted at the last meeting (except that the specifications for the Federal funds rate reflect the modifications agreed upon on January 6). As suggested below, the particular language needed in the opening lines of the money market formulation would depend on the specific conditions sought; the three alternatives shown--calling, respectively, for somewhat easier, prevailing, and somewhat firmer money market conditions--are intended to be associated with the specifications discussed in the preceding section under alternatives A, B, and C. "Monetary Aggregates" Formulation The Committee seeks to encourage near-term rates of growth in M-1 and M-2 on a path believed to be reasonably consistent with the longer-run ranges for monetary aggregates cited in the preceeding paragraph. Specifically, at present, it expects the annual growth rates over the January-February period to be within the ranges of ____ per cent for M-2. to ____ per cent for M-1 and ____ to ____ In the judgment of the Committee such growth rates are likely to be associated with a weekly-average Federal -16funds rate of about ____ per cent. If, giving approximately equal weight to M-1 and M-2, it appears that growth rates over the 2-month period will deviate significantly from the midpoints of the indicated ranges, the operational objective for the Federal funds rate shall be modified in an orderly fashion within a range of ____ to ____ per cent. In the conduct of day-to-day opera- tions, account shall be taken of emerging financial market conditions, including the unsettled conditions in foreign exchange markets. If it appears during the period before the next meeting that the operating constraints specified above are proving to be significantly inconsistent, the Manager is promptly to notify the Chairman who will then decide whether the situation calls for supplementary instructions from the Committee. "Money Market" Formulation At this time, the Committee seeks to maintain about the prevailing money market conditions (OR TO ACHIEVE SOMEWHAT EASIER OR SOMEWHAT FIRMER MONEY MARKET CONDITIONS) during the period immediately ahead, provided that monetary aggregates appear to be growing at approximately the rates currently expected, which are believed to be on a path reasonably consistent with the longerrun ranges for monetary aggregates cited in the preceding paragraph. Specifically, the Committee seeks to maintain the weekly-average Federal funds rate at about [DEL: 6-3/4-percent] ____, so long as M-1 -17and M-2 appear to be growing over the [DEL: December-January] JANUARYFEBRUARY period at annual rates within ranges of [DEL: 2-l/2-to-8-1/2] ____ per cent and [DEL: 6-to 10] ____ TO ____ respectively. If, TO ____ per cent, giving approximately equal weight to M-1 and M-2, it appears that growth rates over the 2-month period are approaching or moving beyond the limits of the indicated ranges, the operational objective for the weekly-average Federal funds rate shall be modified in an orderly fashion within a range of [DEL: 6-l/2-to-7] ____ TO ____ per cent. In the conduct of day- to-day operations, account shall be taken of emerging financial market conditions, including the unsettled conditions in foreign exchange markets. If it appears during the period before the next meeting that the operating constraints specified above are proving to be significantly inconsistent, the Manager is promptly to notify the Chairman who will then decide whether the situation calls for supplementary instructions from the Committee. Appendix I Projected Federal Funds Rate 1978 Alt. A Alt. B Alt. C QI 6-3/8 6-7/8 7 QII 7¼ 7½ 7¾ QIII 7-5/8 7-7/8 8-1/8 QIV 7¾ 8 8¼ Appendix II Implied Velocity Growth Rates V (GNP/M 1978 Alt. A Alt. B Alt. C I 6.4 6.5 6.6 II 5.3 5.6 5.8 III 5.5 5.4 5.2 IV 6.9 6.5 6.2 I 5.3 5.3 5.1 II 2.4 1.7 2.1 III 1.2 1.9 2.3 IV 3.2 3.6 3.6 V 1 (GNP/M2 1 1978 Appendix III Expansion in Reserves Over the Period From QIV 1977 to QII 1978 Consistent With Proposed Alternatives (Seas. adj. annual rates) Alt. A Alt. B Alt. C Nonborrowed Reserves 5.9 4.3 2.9 Total Reserves 7.8 6.9 6.2 Monetary Base 8.8 8.5 8.3 Shown above are 6-month growth rates in various reserve measures consistent with the mid-points of the alternative longerrun paths for the monetary aggregates presented in this blue book. Appendix Table IV-1 MONEY STOCK--M-1 (Annual rates of growth, compounded quarterly)Base Period Ending Period 1975 1976 1977 741V 1/ 7511 7511I 751V 761 7611 76III 761V 771 7711 77 11 I 0.7 II 3.9 7.1 III 5.0 7.2 7.3 IV 4.4 5.6 4.9 2.5 I 4.1 4.9 4.2 2.7 2.9 II 4.8 5.6 5.3 4.6 5.6 III 4.7 5.4 5.1 4.5 5.2 4.4 IV 5.0 5.6 5.4 5.0 5.6 5.6 6.7 I 4.9 5.4 5.2 4.9 5.3 5.1 5.5 4.3 II 4.3 5.8 5.6 5.4 5.9 6.0 6.5 6.5 8.7 III 5.7 6.2 6.1 5.9 6.4 6.7 7.3 7.5 9.2 9.7 IV 5.8 6.3 6.2 6.0 6.5 6.8 7.3 7.4 8.4 8.3 6.8 6.5 5.8 ** 1978 751 * * * * * ** * ** ** IV Alt. A 5.7 6.1 6.0 6.2 6.5 6.3 6.5 6.5 Alt. B 5.6 6.0 5.9 6.1 6.4 6.2 6.4 6.3 6.6 6.3 5.6 Alt. C 5.6 5.9 5.8 6.0 6.3 6.1 6.3 6.2 6.5 6.1 5.4 Based on quarterly average data. 77IV Appendix Table IV-2 MONEY STOCK--M-2 (Annual rates of growth, compounded quarterly)Base Period Ending Period 1975 1976 1977 74IV 751 7511 1/ 75IV 761 7611 76III 76IV I 5.8 II 8.1 10.4 III 8.9 10.4 IV 8.3 9.2 8.5 6.6 I 8.7 9.4 9.1 8.4 10.2 II 9.1 9.7 9.6 9.3 10.6 10.9 III 9.1 9.7 9.5 9.3 10.2 10.2 9.4 TIV 9,6 10.2 10.1 10.0 10.9 11.1 11.2 13.1 I 9.7 10.2 10.1 10.1 10.8 1o0 9 10.9) 11.7 10.3 II 9,7 10.1 10.1 10.0 10.6 10.7 1 , (6 11.0 9.9 III 9.8 10.2 10.1 10.1 10.6 10 7 10.6 10.9 10.2 TV 9.6 9 9 9.8 10.2 10.2 10.1 10.3 9.9 771 7711 7711 77IV 10.5 .A*'* 1978 7511 9.6 9.5 10.1 9, ? 10.7 9.2 * IV Alt.A 9.4 9.6 9.6 9.5 9.6 9.6 9.1 8.9 8.5 8.7 Alt. B 9.3 9.5 9.4 9.4 9.4 9.4 8.9 8.6 8.2 8.3 Alt. C 9.2 9.4 9.3 9.2 9.2 9.2 8.7 8.3 7.8 7.8 Based on quarterly average data. Appendix Table IV-3 MONEY STOCK--M-3 (Annual rates of growth, compounded quarterly)En g Base Period Ending Period 1975 1976 1977 1978 1/ 74IV 751 7511 75111 751V 761 7611 76III 761V 771 7711 77111 771V I 8.0 II 10.4 13.0 III 11.5 13.3 13.7 IV 11.1 12.2 11.8 9.9 I 11.3 12.1 11.8 10.9 11.9 II 11.4 12.2 12.0 11.4 12.1 12.3 III 11.5 12.1 11.9 11.5 12.0 12.1 11.9 IV 12.0 12.5 12.5 12.2 12.8 13.1 13.5 15.2 I 11.9 12.5 12.4 12.2 12.6 12.8 12.9 13.5 11.8 II 11.8 12.2 12.1 11.9 12.2 12.3 12.3 12.5 11.1 10.4 III 11.9 12.3 12.2 12.0 12.3 12.4 12.4 12.6 11.7 11.7 13.0 IV 11.8 12.2 12.1 11.9 12.2 12.2 12.2 12.3 11.6 11.5 12.1 11.2 Alt.A 11.2 11.4 11.3 11.2 11.3 11.2 11.1 11.0 10.5 10.3 10.3 9.8 9.4 Alt. B 11.1 11.3 11.2 11.0 11.1 11.0 10.8 10.7 10.2 10.0 9.9 9.3 8.8 Alt. C 10.9 11.1 11.0 10.8 10.8 10.7 10.6 10.4 9.9 9.6 9.5 8.8 8.2 IV Based on quarterly average data. APPENDIX V The following table compares M-2 and M-3 growth patterns (and their respective interest-bearing components) with and without a onehalf percentage point increase in the ceiling rate on small denomination 1/ time deposits. All data in the table are per cent changes at seasonally adjusted annual rates. 1978--I III IV QIV '77 to QIV '78 Without a With a 1/ change in ceiling rate change in ceiling rate ate A B B C A C Interest-bearing Component of M-2 7.7 7.5 7.5 7.7 7.5 7.7 8.0 7.5 10.6 11.6 10.9 11.1 8.8 8.5 12.6 9.9 9.0 8.3 9.4 11.4 10.1 8.9 8.3 11.0 10.5 9.9 M-2 1978--I II III IV 6.8 7.4 7.4 7.6 6.5 6.8 7 7 6.1 6.3 6.8 6.9 6.8 8.5 9.5 8.9 6.6 8.8 8.6 8.1 QIV '77 to QIV '78 7.5 7.1 6.7 8.7 8.3 9.8 9.0 8.4 8.5 9.5 8.0 7.5 7.5 Thrift Deposits 8.7 9.7 7.0 9.6 6.5 10.3 6.6 10.4 9.3 8.4 1978--I II III IV QIV '77 to QIV '78 10.4 9.5 9.1 9.2 9.2 9.1 8.3 8.0 8.1 9.6 8.6 7.8 8.9 8.9 8.6 7.6 8.2 7.9 7.9 M-3 1978--I II III IV 8.0 8.1 7.9 8.0 QIV '77 to QIV '78 8.2 7.7 7.3 7.3 7.3 7.2 6.6 6.7 6.9 8.0 9.0 9.9 9.5 8.2 1/ The staff has assumed that the deposit ceiling rate is increased in May under Alternative A, March under B, and February under C. 1/13/7 CHART 1 MONETARY AGGREGATES NARROW MONEY SUPPLY M 1 BILLIONS OF DOLLARS 350 330 310 290 BROADER MONEY SUPPLY M2 840 820 810 800 790 1976 1977 1978 S N 0 1977 D J 1978 1/13/78 CHART 2 MONETARY AGGREGATES BANK CREDIT SEND BILLIONS OF DOLLARS OF MONTH -900 -860 -820 -780 I I RESERVES F 740 I BILLIONS OF DOLLARS 37 WEEKLY AVERAGES TOTAL - 36 - 35 - 34 NONBORROWED I i 1976 1977 1978 33 CHART 3 1/13/78 MONEY MARKET CONDITIONS AND INTEREST RATES IONEY MARKET CONDITIONS PER CENT WEEKLY WEEKLY AVEAGS AVERAGES -1 7 -- 6 INTEREST RATES Short-term FEDERAL RATE -1 5 RESERVES BILLIONS OF DOLLARS 2 0 l 1976 I 1977 1978 I 2 1976 1977 1978 1975 1977 1978 Table 1 CONFIDENTIAL (FR) CLASS II-FOMC MONETARY AGGREGATES JAN. 13, 1978 ACTUAL AND CURRENT PROJECTIONS, SEASONALLY ADJUSTED Money Supply Narrow Broad Period (Ml) (Mij (M2) M2 I Total U S Govt. Time & Savings Deposits Other Than CD's Total Deposits 1/ d _____I Total Tt hr Tan I Savings ther CD's I_____ Other___ Nondeposit Sources of Funds 2 I_____I MONThLY LcVELS-sBIL 1977-OLT. NLV. DEC. 1976--JAN. I 333.7 333.2 335.4 (337.2) 799.6 802.6 806.5 (810.9) 10.3 6.7 11.3 247.5 251.1 252.7 (255.0) 66.4 70.9 74.7 ( 77.6) 5.1 9.6 1.1 13.2 11.1 12.9 10.9 -4.4 72.8 8.5 6.6 4.6 10.8 15.0 11.0 -1.9 3.2 48.2 14.6 18.3 12.2 12.3) 3.3 -0.5 0.5 2.21 13.2 17.5 7.6 S10.91 12.3) 1.4) 465.9 469.4 471.1 (473.7) 9.4 10.4 7.3 9.8 10.9 8.1 I 10.5) 532.2 540.3 545.8 1551.4) 218.4 218.3 218.4 (218.8) 57.4 60.0 61.6 ANNUAL GROWTH QUARTERLY 1977--2ND QTR. 3RD OTR. 4TH QTR. 8.2 10.6 6.1 8.8 10.4 6.9 -39.3 22.4 9.5 8.5 15.2 9.2 10.3 7.6 -18.2 15.2 -55.0 8.3 10.0 12.9 23.8 QUARTERLY-AV 1977--2ND OTR. 3RD CTR. 4TH QTR. 8.4 9.3 6.8 MONTHLY 1977--OCT. NOV. DEC. 1978--JAN. DEC.-JAN. 12.0 -1.8 7.9 6.4) 1 10.1 4.5 5.8 6.5) 7.2) 1 6.2) -44.9 -419.4 823.9 -85.0) 340.31 1 [ 9.3) 60.8 81.3 64.3 46.61 56.7) WEEKLY LEVtLS-BIL 1977-DEC. 1 14 21 28 334.9 333.9 335.4 335.7 806.1 605.1 805.8 807.0 544.1 545.3 545.7 547.3 471.2 471.3 470.4 471.3 218.2 218.4 218.1 218.5 253.0 252.9 252.3 252.8 1976-JAN. 4 339.8 812.6 549.5 472.7 218.4 254.3 NOTE: 1/ 2/ 4 72.9 74.0 75.2 76.0 76.7 DATA SHOWN IN PARENTHESES ARE CURRENT PROJECTIONS. P - PRELIMINARY INCLUDES TREASURY DEPOSITS AT MEMBER BANKS AND FEDERAL RESERVE BANKS. INCLUDES BORROWINGS FROM UTHER THAN COMMERCIAL BANKS IN THE FORM OF FEDERAL FUNDS PURCHASED, SECURITIES SOLD UNDER MENTS TO REPURCHASE, AND OTHER LIABILITItS FOR BORROWED MONEY, PLUS GROSS LIABILITIES TO OWN FOREIGN BRANCHES (EURDOLLAR BORROWINGS), LOANS SOLD TO AFFILIATES, LOAN RPS, AND OTHER MINOR ITEMS. AGREE- Table 1-A TIME AND SAVINGS DEPOSITS AT ALL COMMERCIAL BANKS SEASONALLY ADJUSTED EXCEPT AS NOTED Total Timenand Savings Period JAN. Individual Nonprofit Business (NSA) 13, 1978 Time Deposits Savings Deposits Total CONFIDENTIAL (FR) CLASS II FOMC Government (NSA) Total Memo: Large Large Small Negotiable CD's Denomination Denomination Nonpro,,, 6 OUJI1ANDINGb I BILLIONS) 1977--APRIL MAY JUNE JULY AUG. SEPT. OCT. NOV. DEC. CHANGES 505.7 509.2 514.6 519.5 522.5 525.8 532.2 540.3 545.8 211.9 212.7 212.7 213.6 216.2 217.8 218.4 218.3 218.4 195.3 196.3 196.9 198.6 201.4 203.3 204.2 204.5 204 7 9.8 9.9 9.9 9.9 10.1 10.1 10.0 10.1 10.1 6.8 6.6 6.0 5.0 4.8 4.4 4.2 3.7 3.6 160.4 162.9 164.2 165.1 165.3 166.0 166.7 165.4 165.6 61.6 62.3 63.9 62.8 63.2 63.2 66.4 70.9 74.7 24.5 13.6 11.4 2.5 -5.6 8.1 -3.1 -1.8 -0.9 4.7 5.9 9.3 14.4 -0.2 -1.4 6.4 13.9 4.9 7.3 3.0 0.4 0.3 -0.3 0.5 7.6 -0.6 -1.0 -0.2 -0.4 -0.2 -0.5 -0.1 5.7 3.8 0.4 1.7 5.9 a.1 5.5 4.4 2.9 0.2 1.0 5.2 9.4 5.3 1.3 0.9 0.2 0.7 0.7 -1.3 0.2 1.6 -1.1 0.4 0.0 3.2 4.5 293.8 133.4 296.4 302.1 305.9 306.3 306.0 313.9 322.0 327.5 133.5 137.9 140.8 141.0 142.0 147.2 156.6 161.9 38.2 (S bILLIuNS) 54.7 16.6 17.5 1.6 1976--1V 14.3 11.8 8.4 1.4 1977--I I11 III IV 15.1 10.4 12.7 10.4 4.4 3.5 2.5 7.1 4.4 4.9 3.4 1.2 0.7 0.1 0.1 0.0 0.9 2.6 1.6 0.6 -0.1 0.1 0.6 1.7 2.8 1.9 0.9 0.3 0.2 0.0 0.0 0.2 0.0 -0.1 0.1 0.0 1977 YEAR -2.5 QUARTERLY AVERAGE: 16.8 1.9 2.1 -0.5 MONTHLY AVERAGE: 1977--JUNE JULY AUG. SEPT. GCT. NOV. DEC. 5.6 4.7 3.0 3.3 6.4 6.1 5.5 NOTE: COLUMNS (11, (2), ANU (9) ON AGGREGATES. FIGURES IN COLUMNS (1), DERIVED FROM DATA REPOKIlU BY 3MALL AND GOVERNMENTAL UNITS-COLUMNS (4) WEDNESDAY BY LARGE COMMERCIAL BANKS SHIPS. 3.8 ON TAbLE 1-MONETARY THIS TABLE CORRESPOND TO COLUMNS (41, (6), AND (at, RESPECTIVELY, (2), AND (6) REFLECT DAILY DATA REPORTED BY MEMBER BANKS, WITH ESTINATES FUR NONMEMBER BANKS MEMBER BANKS, BENCHMARKED TO NONMEMBER CALL REPORT FIGURES. SAVINGS DEPOSITS OF BUSINESS AND (7)--REFLECT BREAKDOWNS REPORTED EACH (5)-- AND LARGE DENOMINATION TIME DEPOSITS -COLUMN bLOWN UP TU REPRESENT DtPOSITS AT ALL COMMERCIAL BANKS ON THE BASIS OF CALL REPORT RELATION- CONFIDENTIAL (F.R.) CLASS II FOMC TABLE 2 BANK RESERVES ACTUAL AND CURRENT PROJECTIONS, SEASONALLY ADJUSTED IREQUIRED BANK RESERVES Period Total Reserves Nonborrowed Reserves Monetary Base JAN. 13, 1978 RESERVES Total Required Private Demand Total Time Deposits Gov't. and Interbank 35,686 35,756 36,016 (36,6031 21,384 21,437 21,454 (21,613) '12,456 12,646 12,854 (13,057) 1,846 1,675 19709 ( 1,933) MONTHLY LEVELS-$MILLIONS 1977-OC(T. NOV. DEC. 1976-JAN. PERCENT ANNUAL 35,897 36,009 36,219 (36,854) 34,591 35,147 35,650 (36,335) 126,109 126,953 127,922 (129,651) GROWTH QUARTERLY 1977-2ND OTR. 3RD QTR. 41H QTR. 7.3 8.1 6.8 3.9 13.2 3.3 7.2 9.6 8.7 3.5 8.6 5.8 3.0 10.2 4.9 6.5 8.8 6.6 4.6 4.6 7.4 8.2 10.2 8.9 3.0 9.0 5.7 1.9 3.4 3.0 6.1 2.6 15.0 QUARTERLY-AV 1977-2ND QTR. 3RD QTR. 4TH QTR. 4.0 6.3 8.6 MONTHLY 1977--OCT. NOV. DEC. 1978-JAN. DEC.-JAN. ( 9.1 3.7 7.0 21.0) -14.1 19.3 17.2 1 23.1) 9.3 8.0 9.2 16.2) 9.1 2.4 8.7 19.6) ( 14.1) 1 20.3) 12.8) 14.2) ( 5.9 3.0 1.0 8.91 6.6 18.3 19.7 19.01 i 4.9) 19.5) WEEKLY LEVELS-$MILLIONS 1977-DEC. 1978-JAN. NOTE: 28 35,861 36,224 36,258 36,228 35,278 35*715 35,731 35,542 127,055 127,654 128,035 128,330 35,846 35,911 36,113 35,940 21,263 21,479 21e586 21,429 12,799 12,828 12,846 12,891 1,784 1,604 1,680 1,621 4 11 36,929 36,295 36,422 35.855 129,354 128.725 36,607 35,939 21,587 21,377 12,975 13,043 2,045 1,519 7 14 21 RESERVE SERIES HAVE BEEN ADJUSTED TO REMOVE DISCONTINUITIES DAIA SHOWN IN PARENTHESES ARE CURRENT PROJECTIONS. ASSOCIATED WITH CHANGES IN RESERVE REQUIREMENT RATIO. TABLE 3 STRICTLY CONFIDENTIAL (FR) CLASS II - FOMC JANUARY 13, 1978 NET CHANGES IN SYSTEM HOLDINGS OF SECURITIES 1 ($ million, not seasonally adjusted) m A Treasury Bills Net Change 2/ Within 1 year I Treasury Coupons Net Purchases 3/ Over 1 - 5 5 - 10 10 Total , 1972 -490 7,232 1,280 1973 1974 1975 1976 1977 -468 863 4,361 -886 1976--Qtr. 1977--Qtr. 1,164 2,126 886 186 Qtr. Qtr. Qtr. 1977--July Aug. Sept. -1,136 636 1,385 -1,877 -736 2,798 Oct. Nov. Dec. 1977--Nov. Dec. 1978--Jan. 2 9 16 23 30 4/ 5/ 6/ 539 500 434 1,510 1,048 758 167 129 196 1,070 794 997 526 681 628 232 325 171 96 166 192 165 152 Within 1 year Over 1 5 - 5 128 108 99 681 628 -568 -376 96 128 166 108 --- --- -360 -- 1,021 1,001 ---- ----- --- - - --- --- --- -569 -- -- -- -- -- -360 145 - 585 327 1,425 2,145 -- --- 4.1 1.6 1.3 - --- -347 59.4 -2,861 -1,353 1,883 552 4,881 4,474 186 7.1 ----1,159 -- - 707 1,001 10.4 304 -4,771 4,175 -2,331 34 145 1,438 27.2 436 2,738 3,666 4,273 -643 177 386 28 42.6 115 --- -- SSS177 425 -1,358 -46 -154 1,272 3,607 -2,892 -- -- -- -- -- Net RP's 6/ 1,631 9,273 6,303 7,267 6,227 10,035 707 S S- Net Change Outright Holdings Total 5/ ----- ~--------- 1,059 864 3,082 1,613 891 1,433 726 -116 Total 1,294 1,680 959 1,021 1,001 585 351 4 11 18 25 10 10 592 400 1,665 824 469 792 1,582 1,415 1,747 6,202 5,187 4,660 642 553 - 7 14 21 LEVEL--Jan. 11 (in billions) 1/ 2/ 3/ 789 579 797 3,284 3,025 2,833 Federal Agencies Net Purchases 4/ - 707 ------4,380 -736 -376 -9 -- -- -- -347 1.0 8.0 109.9 -9347 -6,530 2,996 3,568 -2,690 -4,479 -1,726 8,439 -1,167 1,317 -4,553 6,709 3,099 -4,526 -7,893 -7.5 Change from end-of-period to end-of-period. Outright transactions in market and with foreign accounts, and redemptions (-) in bill auctions. Outright transactions in market and with foreign accounts, and short-term notes acquired in exchange for maturing bills. Excludes redemptions, maturity shifts, rollovers of maturing coupon issues, and direct Treasury borrowing from the System. Outright transactions in market and with foreign accounts only. Excludes redemptions and maturity shifts. In addition to net purchases of securities, also reflects changes in System holdings of bankers' acceptances, direct Treasury borrowings from the System, and redemptions (-) of Agency and Treasury coupon issues. Includes changes in both RP's (+) and matched sale-purchase transactions (-). TABLE 4 SECURITY DEALER POSITIONS AND BANK POSITIONS (millions of dollars) U.S . Govt. Security Dealer Positions Bil:lr Cnunnn So Tc ues Is ses STRICTLY CONFIDENTIAL CLASS II - FOMC JANUARY 13, 1978 Underwriting Syndicate Positions Corporate Municipal Bonds Bonds Member Bank Reserve Positions at FRB** Basic Reserve Deficit** Borrowing Excess** Reservs I Trtall Se aI o Total a,,i 8 New York York 1 38 Others 38 .... 1976--High Low 8,896 3,668 3,046 175 655 -180 242 24 -8,161 -2,367 -12,744 - 6,908 1977--High Low 7,234 1,729 3,017 -1,445 513 -111 1,861 20 -9,151 -4,234 -13,975 - 8,206 1976--Dec. 8,005 2,443 274 53 -7,168 -11,449 1977--Jan. Feb. Mar. 6,406 4,450 4,906 2,320 1,650 972 265 198 214 68 72 103 -6,421 -5,604 -5,661 -11,504 -11,503 -10,912 Apr. May June 4,567 3.072 4,752 696 123 206 192 213 154 73 206 262 -6,586 -5,693 -5,341 -11,409 -10,175 -10,332 July Aug. 3,899 2,533 4,812 275 200 209 323 Sept. -309 -933 -313 1,084 626 -6,391 -5,581 -7,333 -11,012 -11,452 -11,120 -360 610 *804r 210 251 203p 1,305 863 570p -6,480 -6,971 -7,407p -11,511 -11,825 -11,305p .04 87 81 84 74 -5,011 -7,494 -7,340 -7,447 -6,165 -11,554 -13,734 -12,638 -10,748 -10,259 70 56 53 53p -7,424 -9,151 -7,185 -6,165 -12,292 -11,736 30p 26p -6,717p 8 00 3 - , p - 8,603p -12,976p 4,142 3,617 *4,257 Oct. Nov. Dec. 1977--Nov. Dec. 1978--Jan. 2 9 4,203 3,662 16 4,428 23 30 3,326 2,818 7 3,397 14 21 28 5,059 *4,877 *4,023 *256 *1,375 4 11 *4,416r *5,625 *1,247r *369 -203 547 426 1,113 887 534 879 1,079 575 1,203 1,026 447 0 25p (FR) 316 26 0p -12,335 -10,246 NOTE: Government security dealer trading positions are on a commitment basis. Trading positions, which exclude Treasury securities financed by repurchase agreements maturing in 16 days or more, are indicators of dealer holdings available for sale over the near-term. Underwriting syndicate positions consist of 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. * ** r Strictly confidential. Monthly averages for excess reserves and borrowings Revised. are weighted averages of statement week figures. TABLE 5 SELECTED INTEREST RATES (per cent) Treasury Federal Funds (1) 90-Day (2) _ Short-Term Bills CD's New Comm. Issue-NYq Paper 1-Year 90-Day 0-119 Da (3) (4) (5) STRICTLY CONFIDENTIAL (FR) CLASS II - FOMC JANUARY 13, 1978 I Bank Prime [ Rate (6) U.S. Govt.-Constant Mattrity Yields 3-yr 7-yr 20-yr (7) (8) (9) ong-Term Corp.-Aaa Utility Municipal Home Mortgages New Recently Bond Primary ISecondary Market Issue Offered Buyer Cony. FNMA AucjGNMA Sec. (10) (11) (12) (13) (14) (15) 1976--High Low 5.58 4.63 5.53 4.27 6.32 4.62 5.75 4.50 5.90 4.63 7.25 6.25 7.52 5.65 7.89 6.33 8.17 7.23 8.95 7.93 8.94 7.84 7.13 5.83 9.10 8.70 9.20 8.31 8.45 7.57 1977--High Low 6.65 4.47 6.27 4.41 6.62 4.67 6.70 6.66 7.39 5.83 7.70 6.59 8.36 8.48r 5.93 9.00 8.98 4.63 7.75 6.25 7.99 4.50 7.26 7.90 7.95 5.45 8.65 8.46 8.39 7.56 1976--Dec. 4.65 4.35 4.64 4.50 4.66 6.35 5.68 6.37 7.30 7.94 7.93 5.94 8.79 8.45 7.59 1977--Jan. Feb. Mar. 4.61 4.68 4.69 4.62 4.67 4.60 5.00 5.16 5.19 4.68 4.70 4.72 4.72 4.76 4.75 6.25 6.25 6.25 6.22 6.44 6.47 6.92 7.16 7.20 7.48 7.64 7.73 8.08 8.22 8.25 8.09 8.19 8.29 5.87 5.89 5.89 8.72 8.67 8.69 8.48 8.55 8.68 7.83 7.98 8.06 Apr. May June 4.73 5.35 5.39 4.54 4.96 5.02 5.10 5.43 5.41 4.67 5.16 5.35 4.75 5.26 5.42 6.25 6.41 6.75 6.37 6.55 6.39 7.11 7.26 7.05 7.67 7.74 7.64 8.26 8.33 8.08 8.22 8.31 8.12 5.73 5.75 5.62 8.75 8.83 8.86 8.67 8.74 8.75 7.96 8.04 7.95 July Aug. Sept. 5.42 5.90 6.14 5.19 5.49 5.81 5.57 5.97 6.13 5.28 5.78 5.38 5.75 6.01 6.09 6.75 6.83 7.13 6.51 6.79 6.84 7.12 7.24 7.21 7.60 7.64 7.57 8.15 8.04 8,07 8.12 8.05 8.07 5.63 5.62 5.51 8.95 8.94 8.90 8.72 8.76 8.74 7.96 8.03 8.02 Oct. Nov. Dec. 6.47 6.51 6.56 6.16 6.10 6.07 6.52 6.52 6.52 6.53 6.56 6.51 6.54 6.65 6.61 7.52 7.75 7.75 7.19 7.22 7.30 7.44 7.46 7.59 7.71 7.76 7.87 8.23 8.28 8.34 8.22 8.25 8.38 5.64 5.49 5.57 8,92 8.92 8.96 8.82 8.86 8.94 2 9 16 23 30 6.50 6.58 o.42 6.51 6.55 6.14 6.17 6.10 6.06 6.04 6.55 6.58 6.51 6.48 6.49 6.55 6.55 7.32 7.24 7.17 7.19 7.22 7.56 7.47 7.41 7.42 7.45 8.35 8.32 5.55 8.90 8.86 6.57 6.56 6.52 6.53 7.75 7.75 7.75 7.75 7.75 7.81 6.60 6.55 6.55 6.55 7.80 7.74 7.73 7.75 8.29 8.24 8.23 8.26 8.26 8.24 8.19 8.23 5.51 5.45 5.45 5.47 8.93 8.93 8.93 8.95 8.16 8.19 8.27 8.18 8.21 8.17 8.18 8.18 7 14 21 28 6.51 6.49 6.54 6.65 6.05 6.06 5.99 6.14 6.50 6.51 6.49 6.58 6.55 6.70 6.70 6.65 6.54 6.60 6.64 6.66 7.75 7.75 7.75 7.75 7.27 7.27 7.33 7.39 7.54 7.56 7.63 7.70 7.81 7.84 7.92 7.99 8.35 8.36 -- 8.34 8.38 8.41 8.48 5.54 5.55 5.62 .66 8.95 8.95 8.95 9.00 4 11 18 25 6.69 6.58 6.16 6.48 6.55 6.81 6.65 6.87 6.68 6.69 7.75 8.00 7.40 7.72p 7.72 7.95p 8.01 -- 8.48 5.64 9.00 5.75 n.a. 5 12 6.56 6 .75 p 6.20 6.56 6.58 6.94 6.64 6.74 7.75 8.00 7.39 7.72p 7.71 7 .96p 8.00 8.18p 1977--Nov. Dec. 1978--Jan. Daily--Jan. - 8.18p 8.70p 8.6 6p 8.86 8.85 8.98 8.23 8.24 8.29 8.39 9.13 8.43 8.54 8.89 --- NOTE: Weekly data for columns 1, 2, 3, 5, and 6 are statement week averages of daily data. Data in column 4 are 1-day Wednesday quotes. For columns 7 through 10, the weekly date is the mid-point of the calendar week over which data are averaged. Columns 11 and 12 are 1-day quotes for Friday and Thursday, respectively, following the end of the statement week. Column 13 is an average of contract interest rates on commitments for conventional first mortgages with 80 per cent loan-to-value ratios made by a sample of insured savings and loan associations on the Friday following the end of the statement week. Column 14 gives FNMA auction data for Monday preceding the end of the statement week. Column 15 is a 1-day quote for Monday preceding the end of the statement week. The FNMA auction yield is the average yield in birweekly auction for short-term forward commitments for Governamet underwritten mortgages. GNMA yields are average net yields to investors on mortgage-backed securities for immediate delivery, assuming prepayment in 12 years on pools of 30-year FHA/VA mortgages carrying the coupon rate 50 basis points below the current FHA/VA ceiling. JAN. 13, 1978 Appendix Table 1-A MONEY AND CREDIT AGGREGATE MEASURES Bank ReervesY Period Total . 1 Nonborrowed f± I 2 Monetary Base 3 Ban Credit Total Loans and Investments n 4 ANNUALLY: ANNUALLY Money Stock Measures MI M2 _ M3 M4 M5 M6 M7 9 10 11 _ 6 7 5 (PER CENT ANNUAL RATES OF GROWTH) -0.2 1.0 5.2 3.2 1.2 2.8 5.9 6.9 8.3 3.9 8.0 10.9 4.4 5.6 1.4 8.3 10.9 9.6 11.1 12.8 11.b 6.5 7.1 9.8 9.7 10.3 11.7 10.5 10.0 11.3 10.1 10.2 11.4 2ND HALF 1976 3.6 3.7 6.8 8.9 5.5 10.9 13.1 8.0 11.1 10.3 10.4 1ST HALF 1977 2ND HALF 1977 2.9 7.4 2.3 3.2 7.0 9.2 11.6 9.7 6.4 8.2 9.7 9.0 10.8 11.7 9.0 10.2 10.3 12.4 10.2 11.9 10.4 11.7 -1.8 6.5 E.8 6.6 -2.4 4.6 4.6 7.4 5.1 6.2 10.2 8.9 10.6 12.6 8.6 8.3 3.8 8.2 10.6 6.1 8.5 8.8 10.4 6.9 10.0 9.9 13.4 9.2 7.3 9.1 9.3 11.7 9.2 10.0 12.6 12.1 10.1 9.7 11.9 11.7 10.5 9.9 11.7 11.5 2.7 3.0 9.0 5.7 i.6 1.9 3.4 3.0 6.8 7.2 9.6 8.7 9.5 13.3 9.8 9.3 4.2 8.4 9.3 6.8 9.9 9.2 10.3 7.6 11.3 10.0 12.4 10.7 9.3 8.5 9.7 10.5 10.9 9.4 11.9 12.4 10.7 9.5 11.4 12.0 10.8 9.8 11.3 11.8 1975 1976 1977 2/ SEMI-ANNUALLY: OUARIERLY: 1ST OTR. 2ND UTR. 3RD TR. 4TH (TR. 1977 1977 1977 1977 QUARTERLY-AV: 1ST 2ND 3RD 4TH QTR. QTH. QTR. QTR. 1977 1977 1977 1977 MONTHLY: 1976--DEC. 1977--JAN. FEB. MAR. APR. MAY JUNE JULY AUG. SEPT. OCT. NOV. DEC. P 1/ 2/ P - 4.9 5.6 7.7 8.6 7.7 13.1 13.4 13.4 13.7 10.5 10.3 10.9 -13.1 -3.1 13.0 1.5 4.8 16.9 9.8 -0.5 9.1 3.7 7.0 10.4 -13.3 -4.3 14.1 -3.1 2.9 14.9 -15.4 14.6 -14.1 19.3 17.2 10.6 -0.2 5.0 11.8 6.2 6.4 14.2 8.1 8.2 9.3 8.0 9.2 4.7 15.9 10.9 15.7 1 .0 9.6 9.5 12.3 3.8 13.5 11.8 -0.7 5.4 0.8 5.4 19.4 0.7 4.5 16.3 5.9 7.3 12.0 -1.6 7.9 9.7 7.1 8.6 13.5 4.7 8.1 1 .6 6.4 7.9 10.1 4.5 5.8 11.4 b.9 9.4 12.4 7.3 9. 16.1 11.5 12.3 12.5 7.5 7.3 8.7 7.0 6.2 11.7 5.4 10.0 13.6 6.5 7.5 13.6 10.5 10.6 10.8 8.7 8.0 11.3 7.b 10.8 14.3 11.2 11.7 14.7 11.0 10.2 10.9 11.4 7.8 10.6 7.7 10.5 13.3 10.8 11.4 14.0 10.7 10.0 11.0 11.7 bASEU ON DATA ADJUSTED FOR CHANGES IN BASED ON QUARTERLY AVERAGE DATA. PRELIMINARY RESERVE REQUIREMENTS. 8.5 10.8 7.9 10.6 13.0 10.6 11.2 13.8 10.5 9. JAN. 13, Appendix Table 1-B 1978 MONEY AND CREDIT AGGREGATE MEASURES SEASONALLY ADJUSTED, BILLIONS OF DOLLARS Bank Reserve 1/ Perd Total Nonborrowed 1 2 Bank Credit PeTotd Monetary Base 3 Total Loans and Investments 4 Money Stock Measures M1 M2 M3 5 6 7 M4 M5 M6 M7 10 1 ANNUALLY: 1975 1976 1977 34,015 34.465 36,219 33.885 34.412 35.650 110,394 11b,054 127,922 725.5 788.2 870.0 294.6 312.4 335.4 664.3 740.3 806.5 1092.6 1237.1 1373.9 746.5 803.5 681.2 1174.7 1300.3 1448.7 1308.3 1439.1 1601.7 1351.1 1488.8 1657.6 1976-DEC. 34,465 34,412 1168054 786.2 312.4 740.3 1237.1 803.5 1300.3 1439.1 1488.8 1977--JAN. FEB. MAR. 34*778 34,397 34,308 34.710 34,326 34,204 119,100 119,077 119,572 791.3 801.8 809.1 313.6 314.0 315.4 746.3 750.7 756.1 1248.9 1258.2 1268.1 609.3 814.0 818.2 1312.0 1321.5 1330.3 1452.2 1466.0 1475.5 1502.4 1517.1 1527.8 APR. MAY JUNE 34,660 34,723 34,862 34,606 34,517 34,599 120,749 121,376 122,027 819.7 827.9 834.5 320.5 320.7 321.9 764.6 767.6 772.8 1281.2 1289.0 1299.5 826.2 829.9 836.8 1342.8 1351.3 1363.5 1488.5 1498.1 1511.2 1541.6 1551.8 1565.5 JULY AUG. SEPT. 35,352 35,641 35,621 35,029 34,580 35,001 123,468 124,297 125,144 641.1 849.7 852.4 326.8 328.4 330.4 783.5 787.7 792.9 1316.9 1329.5 1343.1 846.3 850.9 856.2 1379.8 1392.7 1406.3 1528.0 1541.7 1556.3 1582.4 1596.4 1611.3 OCT. NOV. DEC. P 35,897 36,009 36,219 34,591 35,147 35,650 126,109 126,953 127,922 862.0 870.5 870.0 333.7 333.2 335.4 799.6 802.6 806.5 1357.1 1365.6 1373.9 865.9 873.5 881.2 1423.5 1436.5 1448.7 1574.5 1588.5 1601.7 1629.8 1644.1 1657.6 36,013 MONTHLY MEEKLY: 1977-NOV. DEC. 1976-JAN. 9 16 23 30 36,158 35,908 35,926 35,126 35,624 35,027 34,853 126,503 127,038 126,840 127.456 333.8 334.1 331.5 333.2 601.6 803.0 801.8 803.8 871.2 873.6 873.6 876.3 7 14 21 28P 35,861 36,224 36,258 36,228 35,278 351715 35,731 35,542 127,055 127,654 128,035 128,330 334.9 333.9 335.4 335.7 806.1 805.1 805.8 807.0 879.0 879.1 881.0 683.0 4P 36,929 36,422 129,354 339.6 812.6 889.3 WEEKLY DATA ARE DAILY AVERAGES FOR STATEMENT WEEKS. MONTHLY DATA ARE DAILY AVERAGES. WEEKLY M3, M, M6, M7, TOTAL LOANS AND INVESTMENTS AND THRIFT INSTITUTION DEPOSITS. 1/ BASED ON DATA ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS. DATA SHOWN IN MILLIONS OF DOLLARS. P - PRELIMINARY NOTESt DATA ARE NOT AVAILABLE FOR JAN. APPENDIX TABLE 2-A 13, 1978 COMPONENTS OF MONEY STOCK AND RELATED MEASURES Mutual Time and Savings Deposits ------ Period Currency Demand Deposits Total Total 1 2 3 4 8.8 9.6 9.5 2.9 4.3 6.7 8.0 8.1 11.4 11.7 15.2 11.1 17.5 25.0 10.5 7.8 7.7 11.7 -6.1 -23.5 12.9 2ND HALF 1976 8.0 4.6 9.7 15.2 19.8 11.3 1ST HALF 1977 2ND HALF 1977 8.5 10.0 5.7 7.5 10.5 11.6 12.1 9.6 15.0 5.6 8.4 8.8 11.4 9.3 2.2 8.2 10.1 4.9 9.5 9.5 8.5 15.2 11.9 9.4 10.4 7.3 7.5 9.3 10.0 9.8 3.1 8.3 9.1 5.8 12.5 8.3 10.0 12.9 4.5 8.9 6.9 10.4 5.9 13.1 7.2 5.7 15.7 5.6 12.6 9.7 9.6 6.2 4.1 -3.1 5.7 21.6 -1.5 4.6 18.7 6.0 5.4 12.8 -5.4 7.3 Other Than CD's Savings Other .... CD's Other Savings Credit Bank & S&aL Shares1 Union Shares / Private Savings U.S.Gov't Short-term BondslJ Securities Assets1 i 9 10 11 15.5 15.6 14.2 19.4 17.6 20.1 6.2 6.9 7.0 33.4 7.5 9.9 -1.0 19.2 12.1 -21.1 16.2 17.6 7.2 -1.4 15.2 9.5 13.2 0.0 25.9 12.2 15.2 16.1 22.2 6.4 7.3 12.5 6.8 16.5 7.1 16.3 5.1 9.6 1.1 8.1 13.2 11.1 12.9 -7.0 10.9 -4.4 72.8 12.0 11.2 17.3 11.9 16.4 13.8 23.8 19.8 6.1 6.6 7.0 7.9 31.1 8.3 4.9 8.1 20.9 15.3 5.2 6.5 14.0 9.8 10.9 8.1 21.1 8.5 6.6 4.6 8.0 10.8 15.0 11.0 1.9 -1.9 3.2 48.2 13.3 10.9 15.2 14.6 16.7 15.0 19.3 23.9 6.7 6.1 6.5 8.0 11.1 13.6 5.5 8.1 12.9 19.5 7.4 6.6 17.1 16.8 26.1 8.0 21.2 13.8 18.8 6.7 -44.9 4.8 11.0 10.7 6.7 6.9 8.3 13.2 11.0 6.9 7.6 14.6 18.3 12.2 12.9 11.7 10.7 9.5 7.6 10.7 15.4 6.8 8.6 8.6 9.0 4.3 23.2 14.6 10.4 10.9 4.5 0.0 5.1 14.6 6.9 3.3 -0.5 0.5 4.2 9.5 10.5 8.3 10.3 20.5 24.7 0.0 8.4 13.2 17.5 7.6 -3.8 3.8 -20.9 -11.6 13.6 30.8 -20.7 7.6 0.0 60.8 81.3 64.3 14.2 11.4 10.0 10.4 11.1 11.8 15.1 18.3 17.8 14.9 11.3 9.1 15.4 15.2 18.0 11.8 11.7 17.4 20.0 19.7 30.4 27.0 18.5 13.0 6.7 6.6 5.0 6.6 6.5 6.5 6.5 6.4 8.0 7.9 7.9 7.8 17.9 68.9 5.0 3.3 11.6 9.9 0.0 6.5 8.1 8.1 8.0 7.9 12.1 21.5 28.2 18.4 15.8 11.2 2.2 6.6 6.6 6.5 6.5 6.5 2/ 5 6 7 8 (Per cent annual rates of growth) Short Terr 12 ANNUALLY: 1975 1976 1977 2/ SEMI-ANNUALLY: QUARTERLY 1ST 2ND 3RD 4TH OTR. QTR. QTR. QTR. 1977 1977 1977 1977 QUARTERLY-AVt 1ST 2ND 3R0 4TH QTR. QTR. QTR. QTR. 1977 1977 1977 1977 MONTHLY: 1976--DEC. 1977--JAN. FEB. MAR. APR. MAY JUNE JULY AUG. SEPT. OCT. NOV. DEC. P 1/ GROWTH RATES ARE BASED ON ESTIMATED MONTHLY AVERAGE LEVELS DERIVED BY AVERAGING END OF CURRENT MONTH AND END OF PREVIOUS MONTH REPORTED DATA. 2/ BASED ON QUARTERLY AVERAGE DATA. P - PRELIMINARY. APPENDIX TABLE 2-B JAN. 13, 1978 COMPONENTS OF MONEY STOCK AND RELATED MEASURES Time and Savings Deposits Currency Demand Deposits Period Other Thn CD's Total CDs CD's Mutual Savings ank & S&L ans teSharescI /I 1 2 3 4 5 6 7 B 9 10 73.7 80.5 88.4 221.0 231.9 247.0 451.7 491.1 545.8 369.6 427.9 471.1 160.5 201.8 218.4 209.1 226.0 252.7 82.1 63.3 74.7 395.2 457.8 520.7 33.0 39.0 46.7 67.3 71.9 77.0 1976--DEC. 80.5 231.9 491.1 427.9 201.8 226.0 63.3 457.8 39.0 1977--JAN. FE6. MAR. 81.1 81.8 82.2 232.7 232.1 233.2 495.6 500.0 502.8 432.5 436.7 440.6 205.7 208.2 210.0 226.8 228.6 230.6 63.1 63.3 62.2 463.2 467.6 471.5 APR. MAY JUNE 83.1 83.6 64.0 237.4 237.1 238.0 505.7 509.2 514.8 444.1 446.9 450.9 211.9 212.7 212.7 232.2 234.2 238.2 61.6 62.3 63.9 JULY AUG. SEPT. 85.1 85.5 86.4 241.7 242.9 244.0 519.5 522.5 525.8 456.7 459.3 462.6 213.6 216.2 217.8 243.1 243.1 244.8 OCT. NOV. DEC.P 87.1 87.8 88.4 246.6 247.0 532.2 540.3 545.8 465.9 469.4 471.1 218.4 218.3 218.4 9 16 23 30 87.6 87.7 87.7 88.1 246.2 246.4 243.8 245.1 537.4 539.5 542.2 543.2 466.0 468.9 470.3 470.7 DEC. 7 14 21 28P 88.0 88.1 88.5 b6.7 246.9 245.7 246.9 247.0 544.1 545.3 545.7 547.3 1978-JAN. 4P 88.7 251.2 549.5 Tota s Ote Iiv I T Credit Union Savings Shares Bonds i Short. Term U.S. Gov't -y 11 Other Private Short term Assets 1/2/ -- I Non- Total Gov't Deposit Fund Demand Deposits / I1 A 12 13 66.3 66.9 76.0 42.8 49.7 55.9 33.7 51.4 61.8 11.2 11.3 71.9 66.9 49.7 51.4 11.2 39.5 40.0 40.6 72.3 72.7 73.0 67.9 71.8 72.1 50.2 51.1 52.3 49.9 50.3 51.4 10.0 11.7 11.2 475.6 480.0 484.7 41.0 41.4 42.0 73.4 73.8 74.2 72.3 73.0 73.6 53.1 53.8 54.3 50.8 54.6 53.5 10.8 10.6 10.1 62.8 63.2 63.2 490.8 498.3 505.7 42.7 43.4 44.5 74.6 75.0 75.5 73.6 74.0 74.5 54.4 54.7 55.0 53.3 55.6 57.7 11.8 10.2 10.7 247.5 251.1 252.7 66.4 70.9 74.7 512.0 516.8 520.7 45.5 46.2 46.7 76.0 76.5 77.0 75.0 75.5 76.0 55.3 55.6 55.9 57.4 60.0 61.6 10.3 6.7 11.3 218.2 218.3 218.2 217.9 249.8 250.6 252.2 252.7 69.4 70.5 71.8 72.5 56.1 58.1 63.4 63.3 6.6 6.3 6.5 6.1 471.2 471.3 470.4 471.3 218.2 218.4 218.1 218.5 253.0 252.9 252.3 252.8 72.9 74.0 75.2 76.0 62.4 58.1 59.3 66.4 10.0 9.2 13.7 12.0 472.7 218.4 254.3 76.7 14 ANNUALLY: 1975 1976 1977 8.3 MONTHLY: 245.5 WEEKLY: 1977-NOV. I/ 2/ 3/ 4/ P - ESTIMATED MONTHLY AVERAGE LEVELS DERIVED BY AVERAGING END OF CURRENT MONTH AND END OF PREVIOUS MONTH REPORTED DATA. INCLUDES PRIVATE DOMESTIC NONFINANCIAL INVESTORS' fOLDINGS OF COMMERCIAL PAPER, BANKERS ACCEPTANCES, SECURITY RP'S AND MONEY MARKET MUTUAL FUND SHARES. BORROWINGS BY BANKS FROM OTHER THAN COMMERCIAL BANKS IN THE FORM OF FEDERAL FUNDS PURCHASED, SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE, AND OTHER LIABILITIES FOR BORROWED MONEY, PLUS GROSS LIABILITIES TO OWN FOREIGN BRANCHES (EURODOLLAR BDRROWINGS), LOANS SOLD TO AFFILIATES, LOAN RPS, AND OTHER MINOR ITEMS. INCLUDES TREASURY DEPOSITS AT MEMBER BANKS AND FEDERAL RESERVE BANKS. PRELIMINARY 10.5 13, 1978 JAN. APPENDIX TABLE 2-A COMPONENTS OF MONEY STOCK AND RELATED MEASURES Corrected Copy Mutual Savings Bank & S&L Shares Time and Savings Deposits Currency Period Demand Deposits Credit Union Shares- andsls Bo 7 8 6 5 (Per cent annual rates of growth) 9 10 Other Than CD's Total Total Savings CD's Other Other Short Term Private U.SGov't Short term Securities Assets 11/ 12 11 1 2 3 4 6.8 9.6 9.5 2.9 4.3 6.7 8.0 8.1 11.4 11.7 15.2 11.1 17.5 25.0 10.5 7.8 7.7 11.7 -6.1 -23.5 12.9 15.5 15.6 14.2 19.4 17.6 20.1 33.4 7.5 9.9 -1.0 2ND HALF 1976 8.0 4.6 9.7 15.2 19.8 11.3 -21.1 16.2 17.6 -1.4 15.2 1ST HALF 1977 2ND HALF 1977 8.5 10.0 5.7 7.5 10.5 11.6 12.1 9.6 15.0 5.6 9.5 13.2 0.0 25.9 12.2 15.2 16.1 22.2 12.5 16.5 7.1 8.4 8.8 11.4 9.3 2.2 8.2 10.1 4.9 9.5 16.3 5.1 9.6 1.1 8.1 13.2 11.1 12.9 -7.0 10.9 12.0 11.2 8.5 15.2 11.9 9.4 10.4 7.3 -4.4 17.3 72.8 11.9 16.4 13.8 23.8 19.8 31.1 6.3 4.9 8.1 20.9 15.3 6.2 6.5 7.5 9.3 10.0 9.8 3.1 8.3 9.1 5.8 12.5 8.3 10.0 12.9 14.0 9.8 10.9 8.1 21.1 8.5 6.6 4.6 8.0 10.8 15.0 11.0 3.2 48.2 13.3 10.9 15.2 14.6 16.7 15.0 19.3 23.9 11.1 13.6 5.5 8.1 12.9 19.5 7.4 6.6 4.5 6.9 17.1 16.8 26.1 8.0 21.2 13.8 18.8 -44.9 4.8 8.9 10.4 5.9 13.1 7.2 5.7 4.1 -3.1 5.7 21.6 11.0 12.9 11.7 10.7 9.5 7.6 10.7 15.4 6.8 8.6 8.6 9.0 4.3 23.2 14.6 10.4 10.9 4.5 0.0 5.1 14.6 8.9 3.3 -0.5 0.5 4.2 9.5 10.5 8.3 10.3 20.5 24.7 0.0 8.4 13.2 17.5 7.6 -3.8 14.2 3.8 -20.9 -11.6 11.4 10.0 10.4 11.1 11.8 15.4 15.2 18.0 11.8 11.7 17.4 20.0 19.7 30.4 27.0 18.5 13.0 ANNUALLY: 1575 1976 1977 19.i 1e.1 SEMI-ANNUALLY: 6. QUARTERLY: IST 2ND 3RD 4TH 1977 1977 1977 1977 QTR. OTR. QTR. QTR. 9.5 QUARTERLY-AV: 1ST 2ND 3RD 4TH 1977 1977 1977 1977 QTR. QTR. QTR. QTR. 1.9 -1.9 MONTHLY: 1976--0EC. 1977--JAN. FEB. MAR. APR. MAY JUNE JULY AUG. SEPT. OCT. NOV. DEC. P 10.7 6.7 6.9 8.3 13.2 11.0 6.9 7.6 14.6 18.3 12.2 -1.5 4.6 18.7 6.0 5.4 12.8 -5.4 7.3 15.7 5.6 12.6 9.7 9.6 6.2 I I i I 13.6 30.8 -20.7 7.6 0.0 60.8 81.3 64.3 - 15.1 18.3 17.8 14.9 11.3 9.1 a a 17.9 66.9 5.0 3.3 11.6 9.9 0.0 6.5 8.1 8.1 8.0 7.9 & a 1/ GROWTH RATES ARE BASED ON ESTIMATED MONTHLY AVERAGE LEVELS DERIVED BY AVERAGING END OF CURRENT MONTH AND ENL OF PREVIOUS MONTH REPORTED DATA. 2/ BASED ON QUARTERLY AVERAGE DATA. B - DI TMTMAODV 12.1 21.5 28.2 18.4 15.8 11.2 2.2 6.6 6.6 6.5 6.5 6.5 a 

Federal Reserve (1978, January 16). Bluebook. Bluebooks, Federal Reserve. https://whenthefedspeaks.com/doc/bluebook_19780117

@misc{wtfs_bluebook_19780117,
  author = {Federal Reserve},
  title = {Bluebook},
  year = {1978},
  month = {Jan},
  howpublished = {Bluebooks, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/bluebook_19780117},
  note = {Retrieved via When the Fed Speaks corpus}
}