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. September Strictly Confidential (FR) 15, 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) September 15, 1978 CLASS I - FOMC MONETARY AGGREGATES AND MONEY MARKET CONDITIONS Recent developments (1) Growth in M-1 picked up to about a 7¾ per cent annual rate in August and appears to be accelerating further in September. For August and September, M-1 is projected to expand at about a 9 per cent annual rate, one percentage point above the upper end of the FOMC's short-run range. M-2 is projected to increase at about an 11¼ per cent annual rate over August and September, more than one percentage point above the upper end of the Committee's range.1/ M-2 growth has been bolstered by a continued sharp rise in the large denomination time deposits included in this measure. Savings deposits at banks also increased markedly in August following two months of decline. Growth in Monetary Aggregates over August-September Period Ranges Latest Estimates M-1 4 to 8 9.0 M-2 6 to 10 Memo: Federal funds rate (per cent per annum) 1/ 7.75 to 8.50 11.3 Avg. for statement week ending 7.87 Aug. 16 23 8.14 8.28 30 8.30 Sept. 6 13 8.33 These figures do not incorporate revisions based on recently available March 1978 Call Report benchmark data for nonmember banks and technical adjustments related to a recently discovered cash items bias. The revised aggregates will be published on September 21. As shown in Appendix Table III, the benchmark revisions increase growth rates for M-1 by 0.5 percentage point for the year-to-date and reduce the growth rate for M-2 over the same period by 0.3 of a point. All tables on subsequent pages of this report (with the exception of Appendix V and the first table following the appendices) are based on the revised series. Growth in total deposits at thrift institutions was sustained in August and early September at about July's rapid pace, although survey results-available for S&L's--indicate that sales of the 6-month certificate in August dropped to roughly half the rate of June and July. (2) Following the August FOMC meeting, incoming data suggested that growth in the key aggregates over August and September would likely be around the upper ends of the ranges specified by the Committee. Accordingly, by late August the Account Management had raised the funds rate objective to the 8¼ per cent area, the upper end of the range specified by the FOMC at its August meeting. On September 8, with M-1 and M-2 both projected to grow at rates significantly above the upper ends of their respective ranges, the FOMC, in a telephone meeting, voted to raise the higher end of the funds rate range to 8½ per cent and instructed the Desk to aim promptly for a Federal funds rate of 8-3/8 per cent. On August 18, for international as well as domestic reasons, the discount rate was raised 1/2 of a percentage point to 7-3/4 per cent. However, until the most recent week, member bank borrowing remained relatively large, reflecting the further rise in the Federal funds and other money market rates. On September 15, major banks initiated an increase in the prime rate from 9-1/4 to 9-1/2 per cent. (3) Yields on short-dated market instruments generally have advanced around ½ to ¾ percentage point since the August FOMC meeting. Bond market yields, on the other hand, have continued to move down somewhat, apparently in part because participants still hold the view that, with economic activity slowing, interest rates are near their peak levels for the current expansion period. (4) As can be seen in the table below, since reaching their highest levels of the current expansion in the week before the July FOMC meeting, long-term corporate yields have declined about ½ percentage point. This decline reflects not only the shift in interest rate expectations that occurred in July, but also the relatively light corporate financing calendar. Declines in yields on municipal bonds have been more moderate, as a heavy volume of refunding activity pushed the total volume of offerings in this sector to a record level in August. While the proceeds from these refundings were channeled into nonmarketable Treasury debt, the Treasury also has sold a substantial volume of marketable debt in the period. In contrast to bond yields, short-term interest rates have advanced on balance since midJuly along with the rise in the Federal funds rate; upward pressures on bill rates were reinforced by foreign central banks sales of about $1.7 billion of these instruments since the August FOMC meeting. Interest Rates on Selected Dates (in per cent) Week Ending July 12 Current Change Week Of July 12 to Current Short-term Federal Funds Rate 1/ 7.72- 2/ 8.33- +.61 Treasury Bill, 3-month Commercial Paper, 90-119 day New Issue CD's, 90-day (Highest quoted) Long-term 2 U.S. Treasury, 0-year 7.15 7.84 7.77 8.43 +.62 +.59 8.04 8.50 +.46 8.72 8.37 p -.35 Corporate AAA, Recently Offered Municipal, Bond Buyer 9.22 6.32 8.72 p 6.02 -.50 -.30 1/ 2/ Average for statement week ending July 12. Average for statement week ending September 13. (5) Real estate and consumer loans at banks are estimated to have posted further large gains in August. Growth in business loans also picked up but remained well below rates established in the first half of the year. In addition to funds obtained from growth in M-2 type deposits, banks financed the expansion in their loan portfolios by increasing their nondeposit liabilities and reducing their security holdings. Given improved deposits flows, outstanding mortgage commitments at S&L's did not fall further, following a number of months of decline, and their mortgage lending probably picked up in August. Yields on new conventional mortgages have edged a bit lower in recent weeks. (6) The table on the next page shows percentage annual rates of change in related monetary and financial flows over various time periods. 1976 & 1977 Average Past Twelve Months Aug. '78 over Aug. '77 Past Six Months Aug. '78 over Feb. '78 Past Three Months Aug. '78 over May '78 Nonborrowed reserves 2.5 6.8 1.4 8.1 3.0 Total reserves 3.2 6.8 5.4 7.0 8.5 Monetary Base 7.7 9.0 7.9 8.0 4.4 6.9 8.0 8.8 7.1 8.8 M-2 (M-1 plus time deposits at commercial banks other than large CD's) 10.4 8.1 8.4 8.8 10.4 M-3 (M-2 plus deposits at thrift institutions) 12.3 9.3 8.9 9.9 11.7 M-4 (M-2 plus CD's) 8.6 10.3 9.2 7.6 8.0 M-5 (M-3 plus CD's) 11.1 10.5 9.3 9.1 10.1 Month-end basis 9.8 11.0 11.8 9.4 5.2 Monthly average 9.5 10.9 10.4 9.8 7.3 -0.4 1.9 1.2 -0.3 -1.1 0.2 0.2 0.5 0.5 -0.1 Past Months Aug. '71 over July '7 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 loa and investments of commercial banks, commercial paper, and thrift institutions--which Growth rat are derived from either end-of-month or Wednesday statement date figures. for reserve measures in this and subsequent tables are adjusted to remove the effect discontinuities from breaks in the series when reserve requirements are changed. Prospective developments (7) The table below presents for Committee consideration two alternative specifications for the Federal funds rate and the monetary aggregates for the September-October period. (More detailed and longer-term data are contained in the tables on pp. 7 and 8). Alt. A Alt. B Ranges for Sept.-Oct. M-1 6½ to 10½ 6 to 10 M-2 8 to 12 7½ to 11½ 8 to 8¾ 8¼ to 9 Federal funds rate (Intermeeting period) (8) Alternative A contemplates a Federal funds rate between now and the next meeting centered on the prevailing 8-3/8 per cent level. Growth in M-1 over the September-October period is expected to be in a 6½ to 10½ per cent annual rate range, largely in reflection of the stronger growth of this aggregate September. that appears in train for If M-1 expands at the mid-point of the expected range, its October level will be above that implied by the upper end of the FOMC's current longer-run range, as indicated in the upper panel of Chart 1 on the following page. (9) For the third quarter, the annual rate of M-1 growth is expected to be around 7-1/4 per cent. This represents a considerable slowing from the rate of the second quarter, and reflects the deceleration of economic activity from the extraordinary spring pace and the lagged response to rising short-term interest rates. CHART 1 Recently Established M-1 Growth Ranges and Actual M-1 Billions of dollars 6%% - Projection 0 Q2 '78-02 '79 - - 370 - -c S350 360 _y / / S "--< Q4 '77 - Q4 1 '78-01'79 '7 8 320 _ 350 330 360 320 - % -r s 330 - 350 Q3'77-Q3 '78 0.. 320 320 320 1977 1978 1979 Alternative Levels and Growth Rates for Key Monetary Aggregates M-1 M-2 Alt. A Alt. B Alt. A Alt. B 1978 August September October 356.8 360.0 361.9 356.8 359.9 361.6 853.5 861.9 867.7 853.5 861.6 867.0 1978 QII QIII QIV 350.6 357.0 363.5 350.6 357.0 363.2 835.4 853.9 872.9 835.4 853.8 872.2 1979 QI 368.0 367.7 888.6 887.8 QII 372.5 372.5 904.4 904.0 10.8 6.3 10.4 5.7 11.8 8.1 11.4 7.5 Growth Rates Monthly: 1978 September October Quarterly Average: 1978 QIII QIV 7.3 7.3 7.3 6.9 8,9 8.9 8.8 8.6 1979 QI QII 5.0 4.9 5.0 5.2 7.2 7.1 7.2 7.3 '78 '79 7.4 5.0 7.2 5.1 9.0 7.2 8.8 7.3 '79 6.2 6.2 8.3 8.2 Semi-Annual: QII '78-QIV QIV '78-QII Annual: QII '78-QII Alternative Levels and Growth Rates for Key Monetary Aggregates (cont'd) M-3 Bank Credit Alt. A Alt. B Alt. A Alt. B 1978 August September October 1454.9 1470.5 1483.1 1454.9 1470.2 1482.3 939.1 949.0 958.3 939.1 949.0 957.9 1978 QII QIII QIV 1420.4 1455.4 1494.1 1420.4 1455.3 1493.2 916.5 940.5 968.5 916.5 940.5 967.5 1979 QI QII 1525.0 1554.9 1523.9 1554.0 996.0 1023.6 993.5 1020.1 12.9 10.3 12.6 9.9 12.7 11.8 12.7 11.3 9.9 10.6 9.8 10.4 10.5 11.9 10.5 11.5 8.3 7.8 8.2 7.9 11.4 11.1 10.7 10.7 10.4 8.1 10.3 8.1 11.3 11.4 11.1 10.9 9.5 9.4 11.7 11.3 Growth Rates Monthly 1978 September October Quarterly Average: 1978 QIII QIV 1979 QI QII Semi-Annual: QII '78-QIV '78 QIV '78-QII '79 Annual: QII '78-QII '79 (10) Expansion in M-2 under alternative A is likely to be in an 8 to 12 per cent annual rate range over the September-October period, raising this aggregate by October to the level implied by the top of its current longer-run range, as shown in the top panel of Chart 2. The interest-bearing component of M-2 is expected to slow markedly from its recent pace as the year progresses. However, given the strength of time and savings deposits thus far in September, growth over the SeptemberOctober period in the time deposit component of M-2 may be at around an 11 per cent annual rate--considerably above the average pace of the first half of the year. Savings deposit growth is not likely to be sus- tained at the August pace, but issuance of 6-month certificates should support growth of small time deposits and banks are expected to continue to sell sizable amounts of large-denomination time deposits to meet loan demands. (11) The staff continues to expect inflows of deposits to thrift institutions to slow from their extraordinarily rapid recent rate, which has been affected by continued shifts from existing financial assets to the new money market certificates. Nevertheless, because deposit growth at S&L's and MSB's has been larger than expected in recent weeks, our projection of total thrift deposit flows has been raised from the last month. Indeed, with growth in the other monetary aggregates also strong, it is likely, as shown in the upper panel of Chart 3, that M-3 in October will be somewhat above the level implied by the upper end of the FOMC's current longer-run range. CHART 2 Recently Established M-2 Growth Ranges and Actual M-2 illions of dollars 9% &#45;&#45;&#45; Q2 '78-02 '79 Projection - 905 0 - 890 6%% - 875 -860-845 01 '78-C 1 ' - 830 SH% 845 -830 - 860 6%% 845 - 830 860 845 Q3 '77-03 '78 6%% 830 815 800 785 770 755 1977 1978 1979 Chart 3 Recently Established M-3 Growth Ranges And Actual M-3 Billions of dollars 1590 - io% Projection S- 1560 S- 1530 -- 8% 9 1500 % Q2'78-Q2'79 - 1470 - 1440 - 1500 10% O )t'78-Q1'79 ,, 7%% 1470 1350 S1440 1320 1500 '8 1290 S1470 1260 -1440 1320 " 1500 1290 1470 / 1260 Q3'77-Q3'78 -1440 7%% 1320 -1410 1290 -1380 1260 S1350 1320 -1320 1290 1260 1977 1978 1979 -10(12) If the Federal funds rate remains around 8-3/8 per cent over the intermeeting period, as envisioned under alternative A, shortterm market interest rates would be expected to remain near current levels. The recent increases in short-term rates appear to have kept them in alignment with the funds rate. Although short-term credit demands of both financial and nonfinancial businesses may pick up in September and October, following a weakening in August, they are likely to remain more moderate than over the first half of the year. Demands for short-term funds from sponsored agencies should moderate somewhat in the weeks ahead from their strong summer pace,in view of the recent strength in thrift deposit flows, and the Treasury will probably not tap the bill market for new money until the latter part of the fourth quarter. (13) Longer-term yields also may change little under alterna- tive A, and could even edge down a little further, unless incoming data come to suggest a more rapid rate of inflation or stronger expansion in real activity than the market is currently expecting. Municipal bond issuance has dropped off substantially in September and will likely continue at a reduced pace in October. Corporate bond offerings are likely to pick up only seasonally from the recent relatively light pace. The Treasury is expected to rise only about $3.0 billion of new money in late September in auctions of 2-year and 5-year notes, and will then not be back in the market until late October. Moreover, institutional investors apparently still have a considerable volume of liquid funds -11available for investment, and dealer positions are light. The recent rapid growth of thrift deposits suggests that mortgage market rates will likely fluctuate around current levels in coming weeks. (14) Alternative B calls for an increase in the Federal funds rate by mid-October to around the midpoint of an 8-1/4 to 9 per cent range. M-1 growth would likely be in a 6 to 10 per cent annual rate range over September-October and M-2 growth in a 7-1/2 to 11-1/2 per cent range. The further increase in short-term rates would be expected to slow the inflows of interest-bearing deposits subject to regulatory ceilings at banks and thrifts, but recent evidence suggests that the new 6-month certificates will probably blunt some of the impact of rising rates on deposit growth, especially at thrifts. (15) The modest increase in the funds rate contemplated under alternative B is, of course, likely to have some upward impact on short-term market rates of interest. However, such rates may rise by less than the funds rate--and long-term rates by quite small amounts-if market participants act on the assumption that the peak in interest rates is even closer at hand. A further increase in the funds rate would reinforce market expectations of another adjustment in the discount rate. Barring such an adjustment, member bank borrowing would be likely to increase noticeably. (16) Under either alternative A or B, short-term interest rates are expected to come under further upward pressure before yearend. With nominal GNP projected to rise at an annual rate of more than -12- 11 per cent over the balance of the longer-run policy period, the Federal funds rate might have to rise to 9 to 9-1/4 per cent during the fourth quarter if growth in M-1 is to be constrained to around the upper limit of its range over the current longer-run policy period. 1/2/ The rise in market interest rates and the anticipated completion of the stock adjustment to the new 6-month certificates is expected to slow the pace of inflows into interest-bearing deposits subject to regulatory ceilings, and growth in both M-2 and M-3 over the QII '78 to QII '79 policy period is projected to be in the upper half of their longer-run ranges. 1/ The staff's projections for the Federal funds rate through mid-1979 are shown in appendix I and for velocity growth rates in appendix II. 2/ Growth in measured M-1 is expected to slow in the fourth and subsequent quarters if the Board regulation with regard to automatic transfers from savings to demand deposits becomes effective November 1. No allowance has been made for such a slowing in the estimates presented in this blue book. Banks are just beginning to publish their pricing schedules for the automatic transfer service. Even after most are published, competitive pressures will undoubtedly tend to change them and in any event it will be very difficult to project the probable public response and the extent to which M-1 will become distorted. These uncertainties about the size of the resulting dis- tortion in M-1 suggest the desirability of supplementing M-1 and M-2 with another measure that would be less affected than M-1 and would still be a reasonable indicator of transactions demands for money. Such a measure-termed M-1+ and defined as M-1 plus savings deposits at commercial banks and transactions balances at thrift institutions--is presented in appendix V. -13Directive language (17) the directive. Given below are suggested operational paragraphs for Alternative language consistent with the short-run specifications of the alternatives discussed in the preceding section is shown for the Committee's objective for the Federal funds rate early in the period. At a later point, alternative language is also provided for placing main emphasis either on monetary aggregates or on money market conditions. The specifications adopted at the August meeting as modified at the telephone meeting on September 8 are shown in strikethrough form. In the short run, the Committee seeks to achieve bank reserve and money market conditions that are broadly consistent with the longer-run ranges for monetary aggregates cited above, while giving due regard to developing conditions in domestic and international financial markets more generally. Early in the period until the next regular meeting, System open market operations shall be directed at attaining a weekly-average Federal funds rate (A) AT ABOUT THE CURRENT LEVEL (B) slightly (OR SOMEWHAT) above the current level. Subsequently, operations shall be directed at maintaining the weekly-average Federal funds rate within the range of [DEL: 7-3/4 to 8-1/2]____ TO ____ per cent. In deciding on the specific objective for the Federal funds rate the Manager shall be guided -14mainly by the relationship between the latest estimates of August-September]SEPTEMBERannual rates of growth in the[DEL: OCTOBER period of M-1 and M-2 and the following ranges of tolerance: [DEL: 4-to-8] ____ [DEL: 6-to-10] ____ TO ____ TO ____ per cent for M-1 and per cent for M-2. If, giving approximately equal weight to M-1 and M-2, their rates of growth appear to be Monetary aggregates emphasis significantly above or below the midpoints Money market emphasis close to or beyond the upper or lower limits of the indicated ranges, the objective for the funds rate shall be raised or lowered in an orderly fashion within its range. If the rates of growth in the aggregates appear to be above the upper limit or below the lower limit of the indicated ranges at a time when the objective for the funds rate has already been moved to the corresponding limit of its range, the Manager is promptly to notify the Chairman who will then decide whether the situation calls for supplementary instructions from the Committee. Chart 4 Recently Established Bank Credit Growth Ranges and Actual Bank Credit Billions of dollars %% 10 30 -- / Q2 '78-Q2 '79 2 '78-2 791010 Projection - - ' - 990 970 - , / 950 - 930 10% 0Q1 '78-Q0 -o- - '79 - 7%-" 0 910 "7 950 930 870 - 910 850850 10% 830- S 950 04 '77-Q4 '78 9 30 810 - 910 850 830 - / - do 10 % 810- Q3 '77-Q3 '78 850 - o950 - 930 - 910 910 . 830- - ^ 81 850 . 830 - 810 " 9717 I I I I8_I I II I I97 9 J 810 1977 1978 1979 890 Appendix I Projected Federal Funds Rate Alt. 1978--QIII QIV 1979--QI QII A Alt. B 8 to 8-1/8 8-1/8 to 8k 8% to 9k 9 to 9 8% to 91 8% to 9 8% to 94 8% to 9 Appendix II Implied Velocity Growth Rates V-1 (GNP/M-1) 1978 1979 Alt. A Alt. B II 8.2 8.2 III 2.4 2.4 IV 3.0 3.3 I 6.7 6.7 II 5.2 4.8 10.2 10.2 III 0.8 0.8 IV 1.4 1.8 I 4.5 4.5 II 3.0 2.8 V-2 (GNP/M-2) 1978 1979 II Appendix III Revisions in the Monetary Aggregates Benchmark adjustments for domestic nonmember banks and data associated with a recently discovered cash items bias problem have been incorporated into the money stock series and related data. The benchmark adjustments are based on the March 1978 call report and affect deposit levels from January 1978 to date. The cash items bias adjustment gradually raises the level of the series from mid-1975 to date. Both M-1 and M-2 grew at an 8.0 per cent annual rate over the first three quarters of 1978, on the revised basis, compared with rates of 7.5 and 8.3 per cent, respectively, for the old series. The impact of benchmark and cash items bias adjustments on annual, quarterly and monthly M-1 and M-2 growth rates are shown in Tables III-1 and III-2. The benchmark adjustments raised the level of M-1 about $500 million in March 1978 and about $1 billion in August. The level of M-2 was reduced about $700 million in March and $2 billion in August. As shown in column 4 of Tables III-1 and III-2, over the first three quarters of 1978 the benchmark adjustment added 0.3 percentage points to M-1 growth and reduced M-2 growth by a like amount. The cash items adjustment corrects for a recently discovered bias associated with transfers of funds by some agencies and branches of foreign banks in New York City on behalf of directly-related institutions. Foreign related banking institutions in New York City have begun to transfer funds for directly-related institutions (parent and III-2 subsidiaries) by drawing checks on accounts held by the related institution at the New York City office; some of these transfers apparently began as early as mid-1975. In effect the New York office was acting as agent for the directly related institution. Since funds due to a directly-related institution are not recorded as deposits, but rather as other liabilities, the cash items generated by these checks are not matched by a demand deposit account, and their deduction in the calculation of money stock measures is therefore inappropriate. since these checks are not officers Also, checks of the New York City agency or branch, they are not included in officers checks data collected to adjust for cash items bias generated by transfers of funds for regular customers by these institutions. In order to correct for this relatively small but growing bias, data were collected from foreign agencies and branches in New York City to provide an estimate of the amount of cash items bias such transfers generated from mid-1975 to April 1978. Since May 1978 daily data are available and will be available on a continuing basis. amounts to about $1 In the most recent period, this bias adjustment billion. As can be seen in columns 4 of Tables III- and III-2 the impact of the cash items adjustment on annual and quarterly growth rates was minor. Because of the volatility of the series, however, individual monthly M-1 growth rates were raised or lowered as much as 1¼ percentage points. Impacts on monthly M-2 growth rates were smaller. Table III-1 Effect of Benchmark and Cash Items Bias Adjustment on M-1 Growth (Seasonally adjusted, per cent annual rates) Differences due to1/ Old Series (1) Revised Series (2) Difference (1) - (2) (3) Benchmark (4) Cash Item Bias (5) Annual 2/ 1975 4.4 4.6 0.2 - 0.2 1976 5.7 5.8 0.1 - 0.1 1977 7.9 7.9 0.0 - 0.0 1977 QIV to 1978 011I (proj) 7.5 8.0 0.5 0.3 0.2 QI 5.6 6.2 0.4 0.1 0.3 QII 9.5 9.9 0.4 0.4 0.0 QIII (proj.) 6.9 7.3 0.4 0.3 0.1 Jan. 10.3 11.3 1.0 0.3 0.7 Feb. -0.7 0.3 1.0 0.6 0.4 Mar. 3.5 3.9 0.4 0.7 -0.3 Apr. 19.0 19.6 0.6 0.3 0.3 May 8.0 7.2 -0.8 0.1 -0.9 June 5.9 7.5 1.6 0.3 1.3 July 5.5 4.8 -0.7 -0.3 Aug. 7.8 8.8 1.0 0.7 0.3 10.2 10.8 0.6 0.3 0.3 3/ Quarterly- 1978 Monthly 1978 Sept. (proj.) i/ In percentage points. 2/ AJerage of QI to average of QIV. 3/ Quarterly average. -0.4 Table III-2 Effect of Benchmark and Cash Items Bias Adjustment on M-2 Growth (Seasonally adjusted, per cent annual rates) Old Series (1) Revised Series (2) Difference (1) - (2) (3) Differences due to l Cash Item. Benchmark Bias (5) (4) Annual 2/ 1975 8.3 8.4 0.1 - 0.1 1976 10.9 10.9 0.0 - 0.0 1977 9.8 9.8 0.0 - 0.0 1977 QIV to 1978 QIII (proj) 8.3 8.0 -0.3 -0.3 0.0 3// Quarterly- 1978 QI 6.9 6.9 0.0 -0.1 0.1 QII 8.3 7.9 -0.4 -0.4 0.0 QIII (proj.) 9.2 8.9 -0.3 -0.3 0.0 Jan. 9.5 9.5 0.0 -0.2 0.2 Feb. 4.7 4.7 0.0 -0.1 0.1 Mar. 5.6 5.1 -0.5 -0.4 -0.1 Apr. 11.5 11.2 -0.3 -0.4 0.1 May 7.8 7.1 -0.7 -0.4 -0.3 June 7.8 7.8 0.0 -0.4 0.4 July 8.6 8.0 -0.6 -0.5 -0.1 Aug. 10.6 10.4 -0.2 -0.3 0.1 11.8 11.8 0.0 -0.1 0.1 Monthly 1978 Sept. (proj.) 1/ In percentage points. 2/ From average of QIV to average of QIV. 3/ Quarterly average. Appendix Table IV-1 MONEY STOCK--M-1 (Annual rates of growth, compounded quarterly)Base Period Ending Period 1975 1976 1977 1978 7511 751 II 75IV 761 7611 76111 76IV 771 77Il 77111 I 2.1 II 4.3 6.5 III 5.2 6.7 7.0 IV 4.6 5.4 4.9 2.9 I 4.6 5.3 4.8 3.8 4.7 II 5.0 5.6 5.4 4.9 5.9 7.0 III 4.9 5.3 5.1 4.6 5.2 5.4 3.9 IV 5.2 5.7 5.5 5.2 5.8 6.2 5.8 I 5.4 5.8 5.8 5.6 6.1 6.4 6.2 7.2 II 5.7 6.1 6.1 6.0 6.5 6.9 6.8 7.9 8.6 III 6.0 6.4 6.3 6.3 6.8 7.1 7.1 8.0 8.4 8.3 IV 6.1 6.5 6.5 6.4 6.9 7.2 7.2 7.9 8.2 8,0 7.7 I 6.1 6.5 6.5 6.4 6.8 7.1 7.1 7.6 7.7 7.4 7.0 II 6.4 6.8 6.8 6.8 7.2 7.4 7.5 8.1 8.2 8.1 8.1 6.9 6.9 7.1 7.1 7.1 7.1 7.3 7.3 7.3 7.2 7.2 7.2 7.0 7.0 * * 1979 751 74IV II Alt. Alt. 6.4 6.4 ** * 6.6 6.6 J* * 6.6 6.6 771V 781 7811 10.3 **** 6.6 6.6 7.4 7.4 6.9 6.9 7.0 7.0 6.2 6.2 Appendix Table IV-2 MONEY STOCK--M-2 (Annual rates of growth, compounded quarterly)1/ Ending Period 1975 1976 1977 1978 Base Period 74IV 1/ 7511 75II 75IV 761 7611 7611 761V 771 7711 77III 77IV 781 I 6.4 II 8.3 10.2 III 8.9 10.2 IV 8.4 9.1 8.6 6.9 I 8.9 9.6 9.4 9.0 11.1 II 9.2 9.7 9.6 9.4 10.7 III 9.2 9.6 9.5 9.3 10.2 9.7 9.0 IV 9.7 10.2 10.1 10.1 10.9 10.9 11.2 13.3 I 9.8 10.2 10.3 10.3 11.0 11.0 11.2 12.3 11.2 II 9.8 10.2 10.2 10.2 10.8 10.7 10.8 11.4 10.4 9,5 III 9.9 10.2 10.2 10.2 10.7 10.6 10.7 11.1 10.3 9.9 10.2 IV 9.7 10.0 10.0 10.0 10.4 10.3 10.3 10.5 9.8 9.4 9.3 8.3 I 9.5 9.8 9,7 9.7 10.0 9.9 9.8 9.9 9.3 8.8 8.5 7.7 7.0 II 9.4 9.7 9.6 9.5 9.8 9,7 9.6 9.7 9.1 8.6 8.4 7.8 7.6 8.2 9.4 9.4 9,2 9.2 9.1 9.1 9,2 9.1 8.7 8.7 8.5 8.4 8.3 8.3 8.1 8.0 8.0 8.0 8.2 8.2 ** 1979 751 II Alt. Alt. 9. 2 9.1 10.3 w* * *** * * 9.3 9.3 7811 9.3 9.3 * 10,3 * * 9.2 9.2 Based on quarterly average data. 8.3 8.2 Appendix Table IV-3 MONEY STOCK--M-3 1/ (Annual rates of growth, compounded quarterly)- Base Period Ending Period 1975 1976 1977 1978 1979 74IV I 751 7511 75111 75IV 761 7611 76111 76IV 771 7711 77111 77IV 781 7811 8.3 II 10.6 13.0 III 11.6 13.2 13.5 IV 11.1 12.1 11.6 I 11.4 12.2 12.0 11.2 12.7 II 11.6 12.2 12.0 11.6 12.5 12.3 III 11.5 12.1 11.9 11.5 12.1 11.8 11.3 IV 12.0 12.5 12.4 12.2 12.8 12.9 13.2 15.0 I 12.1 12.5 12.5 12.3 12.8 12.8 13.0 13.9 12.8 II 11.9 12.3 12.2 12.1 12.4 12.4 12.4 12.8 11.7 10.7 III 12.0 12.3 12.3 12.1 12.4 12.4 12.4 12.7 12.0 11.6 12.5 IV 11.9 12,2 12.1 12.0 12.3 12.2 12.2 12.4 11.7 11.4 11.8 11.1 I 11.6 11.9 11.8 11.6 11.8 11.7 11.6 11.6 11.0 10.5 10.5 9.5 7.9 II 11.3 11.6 11.4 11.3 11.4 11.3 11,1 11.1 10.5 10.0 9.9 9.0 8.0 8.0 * * * * ** 10.8 10.8 10.7 10.7 10.6 10.6 10.5 10.5 10.1 10.0 9.8 9.7 9.7 9.6 9.3 9.2 9.0 8.9 9.2 9.1 ** II Alt. A 10.9 Alt. B 10.9 11,1 11.0 * 10.9 10.9 9.8 S** 10.8 10.8 9 .5 9,4 APPENDIX V Automatic Transfers and a Supplemental Monetary Aggregate When automatic transfers become available November 1 new uncertainties will arise regarding both projected growth in demand deposits and the interpretation of M-1 growth.1/ This new service will permit con- sumers to substitute savings balances, earning explicit interest, for demand deposits, earning no explicit yield. Thus, automatic transfers can be expected to weaken the demand deposit component of M-1--of which consumer deposits are approximately one-third of the total-and simultaneously increase savings balances at commercial banks. While commercial banks may also attract funds from thrift institutions and from other sources, it is the Board staff's judgment that the volume of any such inflows will probably be small and that the bulk of funds attracted to savings accounts subject to automatic transfers will likely come from household demand accounts. The extent of the shift from demand to savings accounts will de- pend heavily on the promotional activity and pricing of this service by commercial banks. A recent informal and confidential System-wide survey of 1/ The impact of automatic transfers on M-1 and M-2 growth was discussed in Appendix IV of the July 1978 Bluebook. NOTE: Data contained in this appendix, including accompanying tables and charts, do not reflect the recent benchmark to the March 1978 Call report. commercial banks indicates that a very high proportion of banks are planning to offer this service beginning in November. Many of these banks indicated that they intend to promote automatic transfers actively. Less clear at this time are the typical pricing features of automatic transfer programs. Many banks have not yet finalized their pricing schedules, and others are very reluctant to divulge such sensitive competitive information, but the survey suggests that pricing plans are likely to vary widely among banks, at least initially.1/ In general, though, respondent banks indicated that they expect their rivals to actively promote this new service and they are willing to meet this competition in order to protect their market shares. In view of this evidence, the staff believes that the amount by which automatic transfers will depress M-1 growth in the first three quarters they are offered may be in the middle or perhaps the upper portion of the 1 to 3-1/2 annual percentage point range estimated previously.-2/ Nevertheless, it should be emphasized that these estimates remain crude and there continues to be a great deal of uncertainty regarding the impact of automatic transfers on deposit conversions and M-1 growth. 1/ Many banks offering information on their pricing plans mentioned termsfrequently involving monthly maintenance charges and per transfer feesthat would appeal mainly to their large household depositors, generally Fragmentary information those with average balances in excess of $1,000. on the distribution of household checking balances by size of account indicates that such large accounts contain over one-half of total household balances. 2/ The lower end of this range is based on 6 per cent of consumer demand deposits converting to savings in the first year, while the upper end is based on conversions of 18 per cent. The 1 to 3 percentage point range for the impact on M-1 growth reported in the July Bluebook was for the QII '78 to QII '79 period and the 1 to 3-1/2 percentage point range given above is for the QIII '78 to QII '79 period. V-3 Since most of the conversions to savings balances are likely to come from demand deposits, a somewhat broader aggregate than M-1which includes both kinds of accounts-will be less vulnerable to distortions caused by automatic transfers. Board staff has, for some time, been conducting research on a variety of alternative definitions of money which reflect recent innovations in the payments mechanism and the changing character of depository institution liabilities. is expected to be completed in several months. A full scale study But in view of the impend- ing problems for interpreting M-1 posed by automatic transfers. Board staff has constructed a supplemental aggregate that may be useful, at least during the transition period in which significant conversions are expected to occur. Table V-1 shows the composition of this aggregate, which is tentatively being called M-+. Besides M-1, it includes savings deposits at commercial banks, NOW accounts at thrifts, credit union share drafts and demand deposits at MSBs. Alternatively, more emphasis could be placed on M-2, as currently defined, although M-1+ is likely to be more closely related to transactions and not as sensitive to shifts among time deposits and other financial assets. M-1+ equaled $581 billion in August, as compared with M-1 of $354 billion. M-1, The largest single component of M-1+, as with the current is demand deposits at commercial banks, followed by commercial bank savings, and then by currency; total NOW balances and other transactions balances at thrifts make up a very small portion of the total. Chart V-1 shows how the composition of this aggregate has changed over time. Some of the increase in the share of savings balances included in M-1+ and the concurrent fall in the share of demand deposits during 1975 and 1976 V-4 TABLE V-1 Level and Composition of M1+ (August 1978) Amount (in billions of dollars) Per cent of total 94.0 16.2 Demand deposits at commercial banks 260.1 44.7 M 1 (1.+2.) 354.2 60.9 Commercial bank savings-1/ 222.5 38.2 3.3 .6 1. Currency 2. 3. 2/ NOW balances- Demand deposits at MSBs .9 .2 Credit union .6 .1 share drafts M1+ Excludes NOW accounts at commercial banks. NOWs at both commercial banks and thrifts. 581.5 100 V-5 CHART V-1 COMPONENTS OF M-1+(Quarterly average seasonally adjusted) Per Cent of M-- 60 Demand deposits 50 - 40 2/ Savings deposits f.--U . - - - - op - Currency 3/ - Other transactions balances I I I 1966 1968 1970 L 1972 1974 Jm 1976 1978 Last observation charted is second quarter 1978. Excluding NOW accounts at commercial banks. Other transactions balances include NOWs, demand deposits at MSBs and credit union share drafts. 30 resulted from shifts from demand deposits to savings associated with regulatory changes. However, the bulk of the decline in the demand deposit share is believed to have stemmed from the widespread application of cash management techniques while the rise in the savings share reflected relatively low market rates of interest during this period. Quarterly growth rates of M-1+--along with current M-1--are shown in Chart V-2. Since savings-which tend to be sensitive to change- ing market yields-are an important component of M-1+, growth of M-1+ has been more responsive than M-1 to the difference between market yields and regulatory ceilings, shown in the lower panel of the chart. When market rates were low relative to regulatory ceilings, such as in 1971 and 1972 and again in 1975 and 1976, savings growth tended to be substantial and M-1+ expanded more rapidly than M-1. Conversely, during those times when market rates rose appreciably above ceilings, such as in 1969, again in 1973, and more recently since late 1977, growth of M-1+ tended to fall below that of M-1. Table V-2 compares growth rates of M-1 and M-1+ over four- quarter policy periods, beginning in early 1975. During all but the two most recent policy periods, growth of M-1+ outpaced that of M-1, in some cases by about 6 percentage points-when market rates were relatively low. In the two most recent policy periods, however, growth in M-1+ dropped below that of M-1, reflecting the impact on savings deposits of increases in market yields during these periods. The lower portion of Table V-3 contains growth rates of M-1 and M-1+ for recent months. The public's demands for these alternative measures of money relative to GNP move inversely with their velocities, which are shown in Chart V-3. Velocities of both M-1 and M-1+ have trended upward over this V-7 CHART V-2 RATES OF GROWTH OF M-1 AND M-1+ AND SPREAD BETWEEN THE TREASURY BILL RATE AND PASSBOOK CEILING RATE (Quarterly average, seasonally adjusted at annual per cent rates) I1 I I I M-1+ I I I I II I I I1 I S/ vB 'V'/ -1" II I I% I -4 . 1 I I I 1 I I I I I I Treasury Bill Rate Less Ceiling Rate on Passbook Accounts r- K196 1966 I 196 I 1968 I 197 I I197 I I 197 I 1970 1972 1974 I197 I 1976 I1978I 1978 0 TABLE V-2 Comparison of Growth Rates Over Four Quarter Policy Periods of M-1 and M-1+ (Seasonally adjusted at annual per cent rates) Memo: M+ less M 1 M1 M1+ QII'75 - QII'76 5.2 11.3 6.1 QIII'75 - QIII'76 4.6 10.5 5.9 QIV'75 - QIV'76 5.7 12.6 6.9 QI76 - QI'77 6.3 12.3 6.0 QII'76 - QII'77 6.6 11.1 4.5 QIII'76 - QIII'77 7.8 11.2 3.4 QIV'76 - QIV'77 7.9 9.3 1.4 QI'77 - QI'78 7.5 7.1 -.4 QII'77 - QII'78 7.9 6.6 -1.3 Period TABLE V-3 Rates of Growth of M-1 and M-1+ (Seasonally adjusted at annual per cent rates) Memo: M1 M1+ 5.7 7.9 12.6 9.3 6.9 1.4 1+ less Annual 1976 1977 Quarterly Average 1977 I II III IV 6.9 8.1 8.1 7.5 12.5 8.5 8.0 6.8 5.6 .4 -.1 -. 7 1978 I II 5.6 9.5 4.5 6.6 -1.1 -2.9 10.3 -0.7 3.5 19.0 8.0 5.9 5.5 7.8 8.8 0.2 2.3 13.4 5.5 3.1 1.7 8.1 -1.5 .9 -1.2 -5.6 -2.5 -2.8 -3.8 .3 Monthly 1978 January February March April May June July August M V-10 CHART V-3 VELOCITIES OF ALTERNATIVE MEASURES OF MONEY (Quarterly) _ 6.5 mmm m Velocity of M1 Velocity of Mj+ _ I 1 1966 1966 6.0 -- 5.5 -- 5.0 -4 4.5 -J 4.0 -4 3.5 -4 3.0 2.5 Velocity of M I 1968 1968 -- I I 1970 1970 I 1972 1972 I I 1974 I 1974 I 1976 I I 1978 S0 1976 1978 V-ll period, as the public has tended to economize on its holdings of these balances relative to GNP. In addition, both velocities have displayed movement around their respective trends, in part related to the interest rate cycle. However, during the years 1975 and 1976 M-1 velocity rose at an unusually fast pace-at a time when the spread of cash management techniques along with changes in regulatory policy depressed M-1 growth. In contrast, movements in M-1+ velocity appear to have been dominated by relatively low rates of interest in these years. Econometric evidence on the demand for M-1+ indicates a reasonably close relationship between the demand for this aggregate and income and interest rates. While automatic transfers are likely to alter the demand relationships for both M-1 and M-1+, it is believed that the overall demand for M-1+ will be much less affected during the transition period, as the principal changes in the behavior of this aggregate are likely to be compositional. During this transition period, M-1+ is likely to be more predictable, based on historical relationships, than M-1 Data on M-1+ are available weekly and involve about the same amount of estimation as for M-1. While Board staff has had no experience in projecting this new aggregate, no special problems are anticipated over and above those that would be encountered in projecting M-1 and M-2. 9/15/78 Chart I Money Market Conditions and Interest Rates MONEY MARKET CONDITIONS Per cent INTEREST RATES Short-term Weekly Averages Weekly Averages Per cent 10 INTEREST RATES Long-term --_-.. 8 9 7 FEDERAL FUNDS RATE 8 F.R. DISCOUNT RATE EURO-D LLARS 3-Month 6 7 - 1977 1978 1977 1978 1977 Per cent - I 1978 11i Chart II CONFIDENTIAL (FR) Class II-FOMC 9/15/78 Actual and Projected Reserves Billions of dollars 38 TOTAL -37 -36 NONBORROWED I I I11111111111 (IIIIIII i i I I I I i IIII I I I Annual rate, per cent MONTHLY GROVWTH RATES - 20 TOTAL II II 1 Jt 0 U I NONBORROWED III II I I J F MA M J J 1977 A S ON I D J I F I I MA M J J 1978 I I I A S I ON 1 20 I D Table 1 CONFIDENTIAL (FR) CLASS II-FOMC MONETARY AGGREGATES SEPT. 15, 1978 ACTUAL AND CURRENT PROJECTIONS, SEASONALLY ADJUSTED Money Stppi Narrow Broad I (M2) (M1 Period MONTHLY I Total US. Govt. Deposits 1/ T Totl - -_ud Time & Savings Depeslts thr than CD's Other avins C's _ Nondeposit Sources of Funds 2/ LEVELS-$BIL 1978--JUNE JULY AUG. SEPT. 350.3 351.9 354.2 (357.2) 846.5 853.9 (862.5) 4.4 11.0 , 7.91 6.6 9.1 10.51 840.5 11.3 14.2 14.9 1 13.7) 490.1 494.6 499.8 576.8 582.0 586.1 (593.1) (505.31 13.0 9.9 S11.31 ( 8.2 7.7 12.41 2.6 1.3 4.9) ( 7.9 7.4 10.8) 2.6 1.6 1.4) 268.4 273.8 277.3 (281.0) 221.7 220.9 222.5 (224.4) 86.7 87.4 86.3 ( 87.8) 69.2 69.2 71.5 I ANNUAL GROWTH QUARTERLY 1978--15T QTR. 2ND OTR. 3RD QTR. ( ( 13.2 13.1 18.8) L 12.7 12.3 18.9) 50.0 32.8 7.0) 8.7 10.2) 17.7 24.1 15.3 16.0) -5.5 9.7 -15.1 20.9) 9.5) 15.8) 2.7) 1 43.2 22.9 5.1) QUARTERLY-AV 5.6 9.5 6.9 1978--1ST QTR. 2ND QTR. 3RD QTR. 6.9 t 8.3 9.21 ( 13.4 11.0 10.3) 1 MONTHLY 1978--JUNE JULY AUG. SEPT. AUG.-SEPT. WEEKLY 7.8 8.6 10.5 12.1) 9.0) 11.3) 6.7 8.5 14.3) 8.9 11.0 12.6 13.21 11.4) 13.01 10.8 -1.6 -4.3 LEVELS-$OIL 1978-AUG. SEPT.- NOTE: 1/ 2/ 5.9 5.5 7.8 10.21 2 9 16 23 P 30 P 353.2 354.0 355.0 354.7 352.6 849.9 852.1 854.2 855.2 854.5 14.2 13.8 P 357.3 860.4 6 496.8 498.2 499.3 15.7 16.0 583.6 584.5 585.3 586.7 588.5 14.5 590.7 14.4 501.9 221.0 221.4 222.2 222,9 223.2 275.8 276.7 277.1 277.6 278.7 86.8 86.3 86.0 86.1 86.6 503.1 223.7 279.4 87.5 500.5 69.8 72.0 69.4 71.3 72.9 DATA SHOWN IN PARENTHESES ARE CURRENT PROJECTIONS. P - PRELIMINARY INCLUDES TREASURY DEPOSITS AT MEMBER BANKS AND FEDERAL RESERVE BANKS. INCLUDES BORROWINGS FROM OTHER THAN COMMERCIAL BANKS IN THE FORM OF FEDERAL FUNDS PURCHASED, SECURITIES SOLO UNDER AGREEAND OTHER LIABILITIES FOR BORROMED MONEY. PLUS GROSS LIABILITIES TO oWN FOREIGN BRANCHES MENTS TO REPURCHASE, Table 1-A TIME AND SAVINGS DEPOSITS AT ALL COMMERCIAL BANKS SEASONALLY ADJUSTED EXCEPT AS NOTED Total Perioderod OUTSTANDING 1977 I$ Total Nonprofit I Nonprofit Business (NSA) SA) 15, 1978 Time Deposits Government (NSA) (NSA) Total r Memo Large Large Small Negotiable CD's Denomination Denomination IDenomination Denomination ($ BILLIONS) 1977-DEC. 1978--JAN. FEB. MAR. APR. MAY JUNE JULY AUG. CHANGES an Savings SEPT. Savings Deposits Individual Invidual CONFIDENTIAL (FR) CLASS II-FOMC 219.6 545.2 551.0 557.5 562.9 566.8 573.6 576.8 582.0 586.1 204.2 205.2 205.4 205.6 206.4 206.7 206.3 206.2 207.9 10.8 17.7 16.9 2.3 0.6 0.4 0.3 220.7 220.9 221.0 221.6 222.0 221.7 220.9 222.5 10.5 10.4 10.4 10.4 10.5 10.6 10.5 10.6 325.7 330.3 336.6 342.0 345.2 351.6 355.1 361.2 363.6 160.6 164.1 170.1 173.7 175.4 180.5 182.0 186.5 188.0 165.0 166.2 168.2 169.7 171.1 173.1 174.7 175.6 74.0 76.3 79.4 82.0 83.4 87.1 86.7 87.4 86.3 -1.6 37.9 23.9 13.9 11.3 -0.2 -1.2 -0.6 5.7 9.2 14.2 -0.7 5.9 12.7 6.6 3.3 1.4 -0.3 0.7 7.1 16.7 14.3 14.2 10.0 2.5 4.3 8.8 6.5 3.5 6.0 3.6 1.7 5.1 1.5 4.5 1.5 1.2 0.3 1.7 1.5 1.4 2.0 1.6 0.9 4.5 5.0 5.2 5.0 4.9 4.7 4.8 4.2 3.9 166.5 BILLIONS) YEAR QUARTERLY AVERAGEs 1977-11 III IV 10.4 13.1 17.1 4.6 3.9 2.9 4.1 4.7 3.3 1978--1 II 18.0 15.3 1.4 0.9 1.2 1.1 -0.3 0.1 0.4 -0.3 5.8 6.5 5.4 3.9 6.8 3.2 5.2 4.1 1.1 0.2 0.1 0.6 1.0 0.2 0.2 0.8 0.3 -0.4 -0.1 1.7 -0.3 -0.1 0.0 0.0 0.1 0.1 -0.1 0.1 0.5 0.2 -0.2 MONTHLY AVERAGE: 1978--JAN. FEB. MAR. APR. MAY JUNE JULY AUG. 0.4 -0.3 -0.8 1.6 -0.1 -0.2 0.1 -0.6 -0.3 4.6 6.3 5.4 3.2 6.4 3.5 6.1 2.4 2.3 3.1 2.6 1.4 3.7 -0.4 0.7 -1.1 . _ _ _ NOTE: (6), AND (8), RESPECTIVELY, ON TABLE 1-MONETARY COLUMNS (1)l (2) AND (9) ON THIS TABLE CORRESPOND TO COLUMNS (4), AGGREGATES. AND (61 REFLECT DAILY DATA REPORTED BY MEMBER BANKS, WITH ESTIMATES FOR NONMEMBER BANKS FIGURES IN COLUMNS (11 , (21, SAVINGS DEPOSITS OF BUSINESS AND BENCHMARKED TO NONMEMBER CALL REPORT FIGURES. DERIVED FROM DATA REPORTED BY SMALL MEMBER BANKS (7)-REFLECT BREAKDOWNS REPORTED EACH AND LARGE DENOMINATION TIME DEPOSITS -COLUMN GOVERNMENTAL UNITS-COLUMNS (4) AND (5)-WEDNESDAY BY LARGE COMMERCIAL BANKS BLOWN UP TO REPRESENT DEPOSITS AT ALL COMMERCIAL BANKS ON THE BASIS OF CALL REPORT RELATIONSHIPS. A~ I _ CONFIDENTIAL (F.R.) CLASS II-FOMC TABLE 2 BANK RESERVES ACTUAL AND CURRENT PROJECTIONS, SEASONALLY ADJUSTED SANK RESERVES Period SEPT. 15, 1978 RESERVES _REQUIRED Total Reserves Nonborrowed Reserves Monetary Base Total Required Private Demand Total Time Deposits Gov't. and Interbank 1 2 3 4 5 6 7 37,548 37,993 37,744 (37,889) 22,151 22,217 22.333 (22,424) 13,575 13,613 13,625 (13,724) 1,823 2.164 MONIHLY LEVELS-SMILLIONS 1978-JUNE JULY AUG. SEPT. PERCENT ANNUAL 37,726 38,190 37,921 (38, 35) 36,632 36,873 36,782 (37,160) 133,873 134,831 135,324 (136,561) ( 5.8 11.6 4.3) 8.6 3.2 ( 5.8) 7.9 10.4 8.0 ( 8.5 6.3 8.2) 1,786 ( 1,741) GROWTH QUARTERLY 1978-1ST QTR. 2ND QTR. 3RD QTR. I ( 5.7 11.8 3.6) I -1.1 13.7 4.9) 4 12.9 10.1 4.4) 1 3.6 5.0 8.21 ( 12.8 11.5 6.6) 13.1 3.4 1.1 8.7) 4.9) QUARTERLY-AY 1978-1ST QTR. 2ND QTR. 3RD QTR. 14.5 ( 0.4 6.31 9.6 8.0 S 8.9) 8.3 7.0 8.0) 16.2 14.2 -7.9 4.6) 1 14.7 3.6 6.3 4.91 -1.61 ( 5.6) MONTHLY 14.7 14.8 1978-JUNE JULY AUG. SEPT. -8.5 ( ( 6.8) ( AUG.-SEPT. -0.9) 19.2 7.9 -3.0 12.3) ( 11.0 8.6 4.4 11.0) ( 4.71 ( 7.71 WEEKLY LEVELS-MNILLIONS 1978-AU. SEPT. 2 9 16 23 30 37,995 37,735 38,127 37,609 38,136 36,557 36 857 37,164 36 003 37 116 134,991 134,628 135,364 135,187 136,051 371642 37,720 37,804 37,618 37,832 22,153 22,308 22,371 22,265 22,430 13,672 13,651 13,641 13,606 13,589 1t817 1,762 6 13 38,313 38,079 37,149 37,569 136,467 136,483 37,958 37,815 22,403 22,228 13,620 13,696 1,934 1,891 a NOTE: i & 5 h RESERVE SERIES HAVE BEEN ADJUSTED TO REMOVE DISCONTINUITIES ASSOCIATED WITH CHANGES DATA SHOWN IN PARENTHESES ARE CURAFNT PROJIETlfTNS. & IN RESERVE REQUIREMENT RATIO. 1,792 1,747 1,813 TABLE 3 NET CHANGES IN SYSTEM HOLDINGS OF SECURITIES1/ ($ million, not seasonally adjusted) Treasury Bills Net Change 2/ Treasury Coupons Net Purchases 3/ 1 - 5 5ver 5 - 10 Over 10 10 To Total -490 7,232 1,280 -468 863 4,361 789 579 797 3,284 3,025 2,833 539 500 434 1,510 1,048 758 167 129 196 1,070 642 553 1,582 1,415 1,747 6,202 5,187 4,660 II II; IV 2,126 886 186 526 681 628 171 96 166 152 128 108 959 1,021 1,001 1978--Qtr. I Qtr. II -2,655 5,444 345 288 1,123 1,156 459 468 247 334 2,175 2,246 668 288 813 370 147 1,618 1977--Qtr. Qtr. Qtr. 1978--Mar. h Wi t in C1 5 12 19 26 Aug, 2 9 16 23 30 Sept. 6 13 20 27 Federal Agencies Net Purchases 4/ - 5 5 - 10 ver 10 592 400 1,665 824 469 792 Total 46 127 104 S - - -- 24 Net RPs R - 1,631 9,273 6,303 7,267 6,227 10,035 -1,358 -46 -154 1,272 3,607 -2,892 726 3,666 4,273 -643 4,175 -2,331 34 -- ----555 301 7,930 -1,133 1,224 707 -- Net Change Outright Holdings olg6/ Total 5/ 1,059 864 3,082 1,613 891 1,433 - 671 519 1,057 1,670 -620 4,395 1978--July within I1hi year STRICTLY CONFIDENTIAL (FR) CLASS II - FOMC SEPTEMBER 15, 1978 - 2,233 1,874 2,341 -135 5,724 -1,026 -699 2,950 231 1,043 -2,536 235 -- -- -- - - -- -- - - 283 171 424 238 113 947 -92 -81 -- -- -173 -- ---- &#45;&#45;&#45; &#45;&#45;&#45; &#45;&#45;&#45; &#45;&#45;&#45; &#45;&#45;&#45; &#45;&#45;&#45; &#45;&#45;&#45; 1,263 - ---- -- -- -- -- -- -- -- -- -- -- 165 -10,119 7,080 3,024 -9,587 -6 -863 461 1,241 209 6,760 -4,641 3,445 3,056 -373 ---- 6 -7,473 2,869 -- -- -- -- -- -- ----- -- ---- -- -- -- -196 532 -22 1,701 118.9 -1.9 3.6 1.6 .9 8.0 9.7 64.7 1.9 10.5 31.0 13.5 LEVEL--Sept. 13 46.2 (in billions) 1/ Change from end-of-period to end-of-period. / Outright transactions in market and with foreign accounts, and redemptions (-) in bill auctions. 3/ 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. 4/ / 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. 6/ 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 Bills ssou Issues 1977--High Low 7,234 1,729 1978--High Low 1977--Aug. Underwriting Syndicate Positions STRICTLY CONFIDENTIAL CLASS II - FOMC SEPTEMBER 15, 1978 (FR) Excess** Member Bank Reserve Positions Borrowing at FRB** Basic Reserve Deficit** Reserves Total Seasonal 8 New York 38 Others ondate Bonds Munipal Bonds 3,017 -1,445 295 0 487 116 513 -111 1,861 20 131 8 -9,151 -4,234 -13,975 5,625 278 2,043 -1,076 215 0 349 123 719 -227 1,716 172 196 25 -8,224 -2,839 -14,602 2,533 4,812 -933 -313 71 128 199 230 200 209 1,084 626 102 112 -5,581 -7,333 -11,452 -11,120 4,142 3,617 4,257 -360 610 804 1,305 863 570 112 83 55 -6,480 -6,971 -7,403 -11,511 -11,825 -11,350 Feb. Mar. 4,127 3,418 2,713 327 1,492 740 484 406 328 32 49 47 -6,047 -4,980 -6,778 -12,299 -12,603 -11,060 Apr. May June 3,183 1,203 2,847 -183 5 78 557 1,212 1,094 44 92 120 -6,196 -4,038 -4,514 -12,998 -11,653 -12,202 July Aug. 1,196 *1,994 -626 *423 143 189p -3,651 -4,788p -10,204 -11,060p 5 12 19 26 730 1,038 626 2,084 -96 -661 -1,076 -432 140 130 134 152 -3,659 -4,707 -3,693 -2,839 - 2 9 16 23 30 1,595 1,928 1,956 *1,941 *2,087 -301 1,382 400 *-305 *462 166 175 184 196 8 20 p -3,242 -5,145 -5,946 -4,567 -3,969 -10,095 -11,433 -10,999 -11,768 -10,364 Sept. 6 13 20 27 *2,338 *3,086 *352 *455 186p 174p - ,5 p -5,753p Sept. Oct. Nov. Dec. 1978--Jan. 1978--July Aug. 51 34 159 176 197 176p 1,317 719 -227 372 -37 1,193 353 15 323 -9 304p 23p 75 p 135 p 56p 305p 212p 1,139p 903 1,589 1,462 1,438 878 963 1,606 1,020p 1,164p 510p 4 41 - - 8,206 8,273 8,273 -11,699 -10,261 -10,110 -10,735p -13,235p 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. * ** Strictly confidential. Monthly averages for excess reserves and borrowings are weighted averages of statement week figures. TABLE 5 SELECTED INTEREST RATES (per cent) STRICTLY CONFIDENTIAL CLASS II - FOMC SEPTEMBER 15, 1978 Short-Term (7) (8) (9) (10) Long-Term Corp .-Aaa Municipal Uti lity Bond New Recently on Buyer ,sue Offered Issue (12) (13) (11) 1977--High Low 6.65 4.47 6.27 4.41 6.62 4.67 6.51 4.56 6.70 4.50 6.66 4.63 7.75 6.25 7.39 5.83 7.70 6.59 7.99 7.26 8.36 7.90 8.48 7.95 5.93 5.45 9.00 8.65 8.98 8.46 8.39 7.56 1978--High Low 8.33 6.58 7.70 6.16 7.91 6.55 7.79 6.42 8.34 6.65 8.30 6.68 9.25 8.56 7.75 7.40 8.57 7.72 8.72 8.01 9.18 8.61 9.22 8.48 6.32 5.58 9.80 8.98 10.02 9.13 9.20 8.43 1977--Aug. Sept. 5.90 6.14 5.49 5.81 5.97 6.13 5.81 5.99 5.78 6.01 5.75 6.09 6.83 7.13 6.79 6.84 7.24 7.64 7.21 7.57 8.04 8.07 8.05 8.07 5.62 5.51 8.94 8.90 8.76 8.74 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 6.41 6.43 6.38 6.53 6.56 6.65 6.51 6.54 6.61 7.52 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 8.16 8.19 8.27 1978--Jan. Feb. Mar. 6.70 6.78 6.79 6.44 6.45 6.29 6.80 6.86 6.82 6.68 6.74 6.64 6.82 6.77 6.73 6.75 6.76 6.75 7.93 8.00 7.86 8.14 7.94 8.00 7.61 7.67 7.70 8.22 8.21 8.68 8.69 8.71 8.60 8.67 8.67 5.71 5.62 5.61 9.02 9.15 9.20 9.17 9.31 9.35 8.56 8.64 8.60 Apr. May June 6.89 6.96 7.28 7.53 6.70 7.02 7.20 6.84 7.20 7.66 6.82 7.06 7.59 8.00 8.27 8.63 7.85 8.07 8.30 8.85 8.95 9.09 8.98 8.40 8.32 8.44 8.53 8.90 7.36 7.60 6.29 6.41 6.73 5.80 6.03 6.22 9.36 9.57 9.70 9.44 9.66 9.91 8.71 8.90 9.05 July Aug. 7.81 8.04 7.01 7.08 7.79 7.73 7.47 7.36 8.00 7.86 7.85 7.83 9.00 8.54 8.33 8.69 8.45 9.14 8.82 9.18 9.01 8.55 8.38 6.28 6.12 9.74 9.79 10.01 9.81 9.15 8.96 5 12 19 26 7.72 7.72 6.99 7.15 7.08 6.95 7.74 7.79 7.80 7.84 7.45 7.52 7.50 7.43 8.00 8.00 8.00 8.00 7.78 7.84 7.88 7.88 8.96 9.00 9.00 9.00 8.51 8.52 8.57 9.20 9.22 9.19 9.10 9.73 6.32 9.73 6.26 9.75 8.55 9.18 9.17 9.12 9.08 6.31 8.56 8.55 8.68 8.72 8.69 8.67 6.24 9.75 2 9 16 23 30 7.89 6.78 6.76 6.96 7.25 7.35 7.71 7.56 7.68 7.83 7.82 7.36 7.17 7.26 7.47 7.55 7.88 7.85 7.85 7.80 7.90 7.81 7.78 7.76 7.85 7.93 9.00 9.00 9.00 9.00 9.00 8.36 8.21 8.37 8.35 8.37 8.40 8.32 8.43 8.36 8.39 8.49 8.41 8.52 8.42 8.43 8.90 8.81 6.12 9.78 -- 9.10 6.03 9.78 9.82 8.89 6.19 9.78 -- 9.00 8.80 8.80 8.91 8.89 9.00 8.87 8.85 6.11 9.80 9.80 9.01 6.16 9.75 -- 8.92 Sept. 6 13 20 27 8.30 7.86 7.91 7.74 7.79 8.00 8.34 8.07 8.30 9.25 9.25 8.35 8.39 8.36p 8.77 8.74p 8.79 2 8.7 p 9.75 9.78 8.92 8.34p 8.35 8.32p 6.13 8.33 7.60 7.70 6.02 n.a. -- 8.89 8.27 8 6 .3 p 7.59 7.77 7.85 7.95 8.19 9.25 8.34 8.35 8.39 8.43 9.25 8.33p 8. 7p Federal Funds (1) 1978--July Aug. Daily--Sept. 7 14 7.94 7.88 7.83 7.87 8.14 8.28 Treasury Bills Market 3-mo 1-yr (2) (3) Auction 6-mo (4) - CD's New Corm. Comm CDs uNew Paper IssueNYC 90-119 90-Day Day (5) (6) - S Bank Prime Rate 7.75 7.75 U.S. Govt.-Constant Maturity Yields 7 S 3 3-yr 7-yr 20-yr 8.56 8.55 8 .34p 7.95 8.06 8.25 9.07 8.91 (FR) Home Mortgages rimarySecondary Market -y FNMA GNMA NA FNMA Cony. Auc. Sec. (14) (15) (16) -- 10.02 -- 10.00 9.16 9.14 9.14 9.20 3 NOTE: Weekly data for columns 1, 2, 3, 6, and 7 are statement week averages of daily data. Weekly data in column 4 are average rates set in the auctions of 6month bills that will be issued on the Thursday following the end of the statement week. Data in column 5 are 1-day Wednesday quotes. For columns 8 through 11, the weekly date is the mid-point of the calendar week over which data are averaged. Columns 12 and 13 are 1-day quotes for Friday and Thursday, respectively, following the end of the statement week. Column 14 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 15 gives FNMA auction data for Monday preceding the end of the statement week. Column 16 is a 1-day quote for Monday preceding the end of the statement week. The FNMA auction yield is the average yield in bi-weekly auction for short-term forward commitments for Government underwritten mortgages. 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. SEPT. 15, 1978 1-A MONEY AND CREDIT AGGREGATE MEASURES Appendix Table Sak Reserves reit Total Non. borrowed Total Loans and Investments 1 2 Period Monetary Base MI M M3 5 6 7 ER CENT ANNUAL RATES OF GROWTH) I I ANNUALLY: 1975 1976 j177 Moey Stock Measures M4 M5 8 9 M6 M7 -0.3 1.0 5.2 3.2 1.2 2.7 5.9 7.0 8.3 3.9 8.0 11.3 10.9 9.6 6.6 7.1 10.1 10.5 9.9 11.5 10.1 10.0 12.1 2/ SEMI-ANNUALLY: 15T hALF 2ND HALF 1977 1977 3.5 o.8 2.9 2.6 7.3 9.0 11.3 10.7 10.1 9.1 9.4 10.3 10.2 12.2 10.7 12.7 1ST hALF 197b 7.5 7.4 8.9 11.4 7.4 10.3 9.5 10.4 8.1 7.0 3.9 7.8 9.3 9.6 10.3 9.5 10.1 7.2 9.6 11.5 12 .6 11.9 12.6 13.2 5.8 11.6 8.6 3.2 7.9 10.4 9.5 13.5 9.6 10.0 9.1 9.3 10.2 9.3 11.1 9.9 8.1 9.5 10.8 12.6 11.8 13.3 13.0 6.9 7.9 10.3 10.1 10.0 8.9 11.3 9.3 10.4 10.5 7.2 12.9 9.2 6.3 7.7 9.0 9.5 6.0 6.1 7.7 9.2 12.4 11.a 9.9 12.4 12 .4 13.7 12.0 9.7 12.4 12.1 14.4 13.5 11.2 13.6 6.9 3.0 7.0 12.0 11.1 8.6 4.4 13.6 7.9 6.9 18.5 15.6 6.0 16.7 5.2 9.5 4.7 5.1 11.2 7.1 7.8 1.0 10.4 11.6 8.5 B.3 11.9 11.2 6.6 8.2 8.0 11.5 8.0 7.5 9.L 9.9 8.7 8.0 10.4 12.7 9.3 8.6 9.6 9.7 8.5 7.8 10.2 QUARTEKLY: 3RD UTR. TnH QTR. 1977 1977 1ik. 1976 1ST 2NO JTR. 1978 UUARTERLY-AV: 3RD QOl. 47H o-x. 1977 1977 7.3 6.1 1.7 3.4 8.8 9.1 1ST 2NO 1976 1V76 b.5 6.3 14.5 0.3 9.7 8.0 7.7 0.7 9.8 5.2 5.9 -17.6 15.9 -13.4 20.9 8.3 8.1 10.0 8.0 15.4 10.6 -0.0 9.3 10.0 15.0 14.9 -8.6 16.1 UTK. TR. 9.6 MONTHLY: 1977--AU(G. SEPT. UCT. NOV. UEL. 1978--JAN. FEB. MAR. APR. MAY JUNE JULY AUG. 1/ 2/ P - P 1.8 -11.4 19.4 8.0 -3.1 bAStLd ON UATA ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS. BASbD ON QUARTERLY AVERAGE DATA. PRELIMINARY Appendix Table 1-B SEPT. 15, 1978 MONEY AND CREDIT AGGREGATE MEASURES SEASONALLY ADJUSTED, BILLIONSOF DOLLARS BoLk Roserves 1 Period eiod Total Non borrowed Maey <to"ik I**ureo ek Credft Total Monetary ase Loans and M M2 M3 M4 M5 M6 M7 Invest- ments ANNUALLY: 33,969 34,441 36,143 33,639 34,3b8 35.574 110,345 118,063 1i7,972 126.2 788.9 875.5 295.2 313.5 338.5 664.7 740.5 809.5 1092.5 1236.5 1376.1 746.1 803.2 883.5 1173.8 1299.2 1450.1 1308.0 1437.6 1603.4 1351.0 1485.0 1666.6 35,500 35,520 34,439 34,894 124,154 124,987 850.0 855.1 330.5 333.0 789.2 795.1 1331.3 1344.9 852.4 858.9 1394.5 1408.7 1541.2 1557.1 1597.5 1613.6 OCT. NOV. bjfC. 35,909 35,965 36, 143 34,503 35,103 35,574 126,06 126,871 127,972 864.3 870.9 875.5 335.9 336.2 338.5 601.4 805.4 809.5 1357.9 1367.1 1376.1 867.8 d76.3 883.5 1424.3 1438.0 1450.1 1574.9 1590.6 1603.4 1633.0 1651.4 1666.8 1978--JAN. FEd. MAk. 36,008 3o,931 36,667 j6, 124 36,525 36,339 129,417 130,156 130,484 885.4 891.2 896.7 341.7 341.8 342.9 815.9 819.1 822.6 1386.6 1393.1 1400.3 892.2 898.5 904.7 1462.9 1472.5 1482.3 1618.7 1629.5 1639.7 1664.4 1697.4 1709.5 APR. MAY JUNE 36,951 37,20 37,726 36,394 6,048 36,632 131,334 132,647 133,873 910.5 922.3 926.9 348.5 350.6 352.6 830.3 635.2 840.6 1411.4 1419.9 1429.8 913.7 922.2 927.3 1494.9 1506.9 1516.5 1652.3 1665.9 1678.0 1723.2 1737.1 1749.4 P 38,194 37,920 3,1677 369781 134,835 135,324 939.b 943.9 354.2 356.8 846.2 853.5 1440.9 1454.9 933.6 939.8 1528.3 1541.2 1689.2 1703.9 1760.8 1775.7 12 19 20 37,198 39,244 37, 60 36,295 36,398 133,761 135,848 134,673 354.6 351.9 354.6 845.6 843.7 847.6 933.3 931.5 934.9 2 9 16 21 30P 37,993 37,723 38,122z 37,118 38,140 36,555 36,845 37,159 36,012 37,120 134,989 134,616 135,360 135,196 136,055 355.2 356.7 357.5 357.4 355.5 849.2 852.0 853.8 654.9 854.3 936.0 938.3 939. 941.0 940.8 1976 1977 MONiHLY* 1977--AUb. SEPT. JULY AUb. WEEKLY: 1978-JULY AUb. 948.7 361.3 861.2 A WEEKLY DATA MONTHLY DA1A ArE DAILY AVERAGES. wEEKLY DATA AKE UAILY AVERA6ES FOR STATEMENT WEEKS. NOTES: MS, M5, Mb, M7, TOTAL LOANS AND INVESTMtNTS AND THRIFI INSTITUTIUN DEPOSITS. DATA SrHUWN IN MILLIONS OF DOLLARS. I/ BAS1U UN DATA ADJUSTED FUR CHANGES IN RESERVE REQUIREMENTS. P - PRELIMINARY SEPT. b P 38,309 37,145 136,465 .. . - __ ARE NOT AVAILABLE FOR SEPT. APPENDIX TABLE 2-A 15, 1978 COMPONENTS OF MONEY STOCK AND RELATED MEASURES Period Currency 1 Demand Demand 2 TOther Deposits Total Time and Savings Deposits OhThan CD's Total Savings 4 5 3 (Cr ca 2/ r Othr 6 am mea CD' 7 Mutual Savings Bank & S&L Shares- Credit Union Shares s S'ings Bonds 8 9 10 Other Private Short Term U.S.Gov't Short-term Securities Assets / 1 / 11 12 reates f gre tb) ANNUALLY: 8.9 9.6 9. 3.3 4.b 7.4 7.9 8.0 11.4 11.7 15.0 11.2 17.5 25.0 11.1 7.8 7.4 11.4 -6.4 -23.4 12.8 15.3 15.5 14.2 19.5 18.8 19.4 6.2 6.9 6.b 33.8 5.5 12.3 -0.7 13.9 27.5 8.7 9.8 7.4 7.1 10.4 11.8 11.9 10.0 15.3 6.4 8.9 13.3 0.6 24.9 12.9 14.5 16.6 20.6 6.4 6.5 2.7 21.6 25.6 26.1 1y97b 9.o 7.7 11.7 6.9 2.1 11.1 43.5 7.5 17.4 6.3 12.4 34.6 1977 1977 10.0 10.7 8.6 5.4 9.9 14.5 10.8 7.7 10.9 1.5 10.6 13.5 3.2 64.0 16.2 11.6 21.7 18.8 6.5 6.4 30.0 20.3 12.4 48.1 1ST wlh. 1978 NL, JTr<. 197t wUATTkLY-AV: 9.5 9.3 3.8 12.0 12.3 9.1 7.4 6.8 2.6 1.3 11.5 11.4 43.2 22.9 6.9 7.3 17.9 14.7 6.3 5.7 15.1 15.1 40.4 9.2 9.1 10.3 7.7 6.4 10.3 13.0 11.2 t.5 7.3 5.4 14.6 11.b 4.5 44.9 14.6 13.9 20.1 20.0 7.0 5.9 15.7 26.4 18.6 32.0 10.5 6.4 5.0 10.3 12.8 10.1 7.3 6.4 2.6 1.6 11.4 10.5 50.0 32.8 8.1 6.8 18.2 15.8 6.3 6.2 17.9 6.5 46.8 20.1 5.6 11.2 11.1 o.3 12.3 6.9 7.8 10.2 -1.0 6.8 8.3 9.2 13.7 18.5 10.9 8.4 8.9 8.0 9.5 4.6 16.3 10.0 4.4 -1.1 1.1 1.5 7.9 13.3 18.0 8.7 7.6 11.4 40.9 81.3 52.5 17.1 16.6 14.0 11.0 9.5 19.5 24.7 21.5 15.8 18.2 6.4 4.8 6.4 6.3 6.3 38.0 23.5 31.2 24.0 4.7 10.8 6.4 29.7 57.9 51.3 10.8 9.4 8.0 6. 11.6 9.1 o .5 9.0 11.0 -2.4 2.9 23.8 5.6 6.5 4.6 8.7 12.3 13.3 10.8 1.5 13.6 6.1 10.2 7.5 b.4 7.6 6.0 5.3 6.7 8.2 10.3 11.5 6.0 1.1 0.5 3.3 2.2 -1.6 -4.3 8.1 10.0 13.2 10.6 6.5 11.5 16.0 22.5 14.2 37.3 48.8 39.3 20.5 53.2 -5.5 9.7 -15.1 7.8 6.2 6.6 6.6 6.8 8.3 11.4 13.7 17.9 15.2 20.0 14.7 12.1 16.8 11.8 11. 6.3 6.2 6.2 6.2 6.1 4.6 6.1 77.6 32.9 13.7 -1.5 -6.0 18.2 32.8 -14.5 20.6 43.5 40.2 33.6 18.9 5.1 3.4 3.4 3.4 1975 976 1977 SEMI-ANNUALLY: IT1 2NL HALF 1977 hALF 1971 ISI nALF uUAklkLYV: Rb wTH. 4In l. AK UK. 41h UK. lST 2ND wTR. 197a) wlk. 197b 1977 1977 MONHlLY: 1977--AUG. SEPT. L.T. NUV. fL.L. 197--JAN. FEb. MAR. AP . MAY JUNk JULY AUG. 1/ P UKLTTh RATES ARE BASED UN ESTIMATED MONTHLY PkrvlflUS MUNTH REPORTED DATA. AVERAGE LEVELS DERIVED BY AVERAGING EtND OF CURRENT MONTH AND END OF SEPT. APPENDIX TABLE 2-B 15, 1978 COMPONENTS OF MONEY STOCK AND RELATED MEASURES Time and Savings Deposits Currency Demand Deposits Period 1 2 otal iTotl Other Than CD's 3 Total 4 450.9 489.7 545.0 369.6 427.0 471.0 201.9 219.6 209.1 225.1 e51.5 ISavingsl S Other 6 s 7 Mutual Sevinls Credit Union Svings Bank & S&L Shares Bonds S, Shares 1/ 8 9 10 ShortOther Private Term ShortU.S. term Gov't c i Assets Sec _Ast 1 11 Total NonGov't Deposit Funds Demand Deposit Dposits 13 14 ANNUALLY: 81.3 67.2 11.9 76.6 66.9 66.6 76.7 43.0 47.3 63.4 62.0 8.3 11.2 11.4 75.1 75.4 71.6 73.0 56.3 56.6 55.7 57.5 10.2 10.7 75.8 76.2 76.6 74.9 76.4 76.7 58.0 60.8 63.4 58.1 10.3 60.1 6.7 11.4 77.0 77.4 77.8 78.8 79.7 79.6 65.7 67.9 69.8 65.3 9.7 66.6 7.5 67.0 7.9 78.2 78.6 78.9 79.2 80.4 82.6 70.9 71.2 71.4 66.1 69.2 50.7 8.3 7.3 11.3 51.2 51.7 79.3 79.8 81.6 83.0 71.6 71.8 69.2 71.5 14.2 14.9 64.8 73.1 13.6 87.8 87.3 71.5 273.0 273.8 274.1 274.6 275.5 86.8 86.3 86.0 86.1 66.6 69.8 72.0 69.4 71.3 72.9 276.2 87.5 394.8 456.9 519.8 33.0 498.2 505.1 43.8 63.8 240.0 249.7 251.5 66.4 70.9 74.0 511.0 515.7 519.8 45.5 46.1 253.6 256.4 258.7 76.3 523.2 525.9 528.8 47.5 220.9 221.0 481.8 484.5 487.b 221.6 222.0 221.7 260.1 262.6 266.1 83.4 87.1 531.7 534.7 538.4 49.5 86.7 579.4 583.0 492.0 496.7 220.9 222.4 271.1 274.3 o7.4 66.3 543.5 549.7 490.8 491.8 493.0 221.2 220.8 220.8 269.6 271.0 272.2 87.8 261.2 578.5 579.6 560.3 93.6 93.8 93.9 94.2 94.4 261.6 262.8 263.5 263.2 261.1 580.8 561.6 582.3 583.6 565.3 494.0 495.3 496.3 497.5 498.8 221.0 221.4 222.2 222.9 223.2 95.1 266.3 587.4 499.9 223.7 73.7 60.7 88.6 221.5 23 .8 85.5 86.3 245.0 521.9 525.9 458.7 462.1 217.0 218.8 241.7 243.3 63.2 246.6 OCT. NUV. DEC. 87.1 248.7 248.5 249.9 531.9 540.1 545.0 465.5 469.2 471.0 219.6 197d--JAN. 252.2 251.7 252.3 550.6 556.7 561.7 474.3 477.3 479.7 220.7 MAR. 89.4 90.1 90.7 APK. MAY JUNE 91.2 92.1 92.8 257.3 258.5 259.9 565.2 571.6 574.5 JULY AUG. P 93.3 94.0 260.9 262.8 12 19 2o 93.k 93.2 93.4 261.6 258.7 2 9 16 23 30P 6P 1975 1976 1977 249.9 160.5 62.7 74.0 39.1 46.8 34.4 51.0 MONThLY: 1977--AUG. SEPT. 67.7 88.6 FEb. 219.4 219.6 79.4 82.0 44.7 46.8 48.1 48.9 50.0 62.0 69.2 WEEKLY: 1978-JULY AUb. SEPT. 1/ i/ 3/ 4/ P - ESTIMAIED MONTHLY AVERAGE LEVELS DERIVED BY AVERAGING END OF CURRENT MONTH AND END OF PREVIOUS MONTH REPORTED DATA. INCLUDES PRIVATE DOESTIC NONFINANCIAL INVESTORS* HOLDINGS OF COMMERCIAL PAPER, BANKERS ACCEPTANCES, SECURITY KP'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 BORROMED MONEY, PLUS GROSS LIABILITIES TO OWN FOREIGN BRANCHES (EURUUULLAR BORROWING6S) LOANS WULD TO AFFILIATES, LOAN KPS, AND OTHER MINOR ITEM3. INCLUDES TREASURY DEPOSITS AT MEMBER BANKS AND FEDERAL RESERVE BANKS. PRELIMINARY 15.1 15.6 14.4 13.8 14.4 15.7 16.0 14.o STRICTLY CONFIDENTIAL (FR) CLASS I - FOMC Attached is a corrected chart to replace the one following page 6 of the September Bluebook. CHART 1 Recently Established M-1 Growth Ranges and Actual M-1 Billions of dollars 1/2% % - - Projection -370 I-Q2 '79 K _ ac - - - - - - - 6 'iv-/v- % 1 350 360 Q1 '78-Q1'79 " 4% 350 6%% S360 .,0 350 - 360 -350 Q3 '77-Q3 '78 c- 340 330 32 0 I I 1977 I I I I I I 1978 I I I I I I I 1979 I 320 

Federal Reserve (1978, September 18). Bluebook. Bluebooks, Federal Reserve. https://whenthefedspeaks.com/doc/bluebook_19780919

@misc{wtfs_bluebook_19780919,
  author = {Federal Reserve},
  title = {Bluebook},
  year = {1978},
  month = {Sep},
  howpublished = {Bluebooks, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/bluebook_19780919},
  note = {Retrieved via When the Fed Speaks corpus}
}