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. December 13, 1985 Strictly Confidential (FR) Class I FOMC MONETARY POLICY ALTERNATIVES Prepared for the Federal Open Market Committee By the staff Board of Governors of the Federal Reserve System STRICTLY CONFIDENTIAL (FR) December 13, 1985 CLASS I - FOMC MONETARY POLICY ALTERNATIVES Recent Developments (1) M1 resumed a rapid pace of expansion in November, with demand deposits and other checkable deposits each showing substantial growth.1 for early December suggest continued strength this month also. Data As a result, growth over the September-to-December period is likely to exceed appreciably the 6 percent pace specified by the Committee. By contrast, the broader aggregates expanded moderately in November, and are expected to grow close to the 6 percent rate sought by the Committee over the September-to-December period. The quite moderate rate of increase of M2 thus far this fall appears attributable in part to shifts of funds by households from such M2 components as small time deposits and money market funds to the stock and bond markets. Commercial banks experienced a sharp inflow of Treasury deposits in November, following Congressional approval of temporary debt ceiling legislation, and held down issuance of managed liabilities in M3. (2) The table below shows preliminary results for the year for growth in the monetary aggregates relative to their long-run ranges. As may be seen, growth in M1 has been well above the 8 percent upper limit of its range, but growth rates in M2 and M3 were, respectively, just below the upper limit and around the middle of their ranges. 1. The computer failure at the Bank of New York on November 21 boosted growth of M1 in November by about one percentage point. Growth in the Monetary Aggregates in 1985 From the Base of Their Long-run Range to QIV '851 (percent, annual rate) Actual growthP Long-run range M1 M2 12.2 8.7 3 to 8 M3 7.9 6 to 9 6 to 9-1/2 p-preliminary estimate. 1. Base is QII '85 for M1, and QIV '84 for the broader aggregates. (3) The debt of domestic nonfinancial sectors apparently expanded at a rapid pace in November. Business loans and nonfinancial commercial paper were bolstered by financing needs related to mergers, and the bond market rally prompted further strong issuance of corporate bonds. The tor- rent of tax-exempt debt continued as issues were brought to market before year-end when proposed restrictions would take effect. The pace of mortgage debt expansion in October was rapid, and available information suggests that mortgage growth continued strong last month. Treasury debt issuance also increased in November, with much of the rise following the temporary debt ceiling increase. For the year as a whole, growth of total debt of domestic nonfinancial sectors is tentatively estimated at 13-1/2 percent, above its 9 to 12 percent range. Perhaps a little over a percentage point of the increase in debt can be traced to the unusual volume of mergers, leveraged buyouts, and stock repurchases; up to another percentage point may reflect issuance of tax-exempt bonds prompted by concerns about possible tax law changes. (4) Growth of total reserves picked up to a 20 percent annual rate in November, reflecting an increase in required reserves against transactions deposits and a considerably higher level of excess reserves. Nonborrowed KEY MONETARY AGGREGATES (Seasonally adjusted annual rates of growth) Sept. Oct. Nov. Money and Credit Aggregates M1 11.9 -1.6 M2 7.1 2.1 6.6 M3 10.1 3.9 5.0 Domestic nonfinancial debt 11.0 11.6 8.2 2.0 16.3 Nonborrowed reserves 2 5.2 6.1 1.8 Total reserves 8.7 4.0 19.7 Monetary base 7.0 6.1 10.1 Adjustment and seasonal borrowing 633 558 1210 (672)3 Excess reserves 666 753 935 Bank credit 13.0 16.0 e Reserve Measures 1 Memo: NOTE: e -- (Millions of dollars) Monthly reserves measures, including excess reserves and borrowing, are calculated by prorating averages for 2-week reserves maintenance periods that overlap months. Estimated. 1. Growth rates of reserve measures are adjusted to remove the effect of discontinuities resulting from phased changes in reserve ratios under the Monetary Control Act. 2. Includes "other extended credit" from the Federal Reserve. 3. Figure in parentheses excludes borrowing by Bank of New York on November 21. reserve paths during the intermeeting period were constructed on the basis of $450 million of adjustment and seasonal borrowing. Excluding the $22.6 billion of overnight borrowing because of computer problems at the Bank of New York (BONY), seasonal plus adjustment credit averaged $734 million during the two complete maintenance periods since the November FOMC meeting. Excess reserves have been unusually strong, especially in the reserve period ending December 4 when there was evidently some maldistribution of reserves as a result of the BONY disruption. So far in the most recent maintenance period, borrowing has averaged only $162 million. (5) The federal funds rate averaged about 8 percent during the intermeeting period, though exhibiting considerable day-to-day and week-toweek volatility in the wake of the BONY borrowing and concentrated settlements of large Treasury security issues that were delayed by debt ceiling problems. Private Most recently, funds have been trading a little under 8 percent. short-term rates have generally shown little net change over the intermeeting period, while bill rates have declined about 25 to 35 basis points. Long- term rate declines have been more substantial, reflecting improved prospects for reductions in the federal deficit, more favorable attitudes about inflation stemming from the situation in oil and certain other commodity markets, and changing sentiments about the outlook for monetary policy. Bond rates have generally dropped 40 to 65 basis points, bringing long-term yields to 6-year lows, and home mortgage rates have fallen about 1/2 of a percentage point. Broad stock price measures have risen substantially since the last meeting. (6) The weighted average foreign exchange value of the dollar depreciated a further 2-1/2 percent during the intermeeting period, bringing its total decline since the G-5 announcement to about 10 percent. In contrast -5to earlier in the post-G-5 period, the dollar has dropped more against European currencies than against the yen. Most recently, the market seems to have perceived that monetary authorities are satisfied with current levels for the dollar, and this perception appears to have helped to stabilize dollar exchange rates. Policy alternatives (7) The table below gives three alternative specifications for growth in the monetary aggregates from November to March, along with associated federal funds rate ranges. Growth implied by each alternative for the December-to-March period is shown in the lower panel of the table. (Detailed data are shown on the table and charts on the ensuing pages.) Alt. A Alt. B Alt. C M1 9-1/2 8-1/2 7-3/4 M2 8 7-1/4 6-3/4 M3 6-1/2 6 5-1/2 5 to 9 6 to 10 6-1/2 to 10-1/2 M1 8 6-1/2 5-1/2 M2 7-1/2 6-1/2 5-3/4 M3 5-1/2 5 4-1/2 Growth from November to March Associated federal funds rate range Implied growth from December to March (8) The specifications of alternative B assume borrowing at the discount window around $400 to $450 million, with federal funds likely to average just below 8 percent. Alternative A conteplates a decline in borrowing to a range of $200 to $250 million and an associated drop in the federal funds rate to near the current 7-1/2 percent discount rate. A slight firming of money market conditions is assumed under alternative C, involving an increase in discount window borrowing to around $550 to $600 million, with federal funds likely to trade in the neighborhood of 8-1/8 percent. Alternative Levels and Growth Rates for Key Monetary Aggregates M3 M2 M1 Alt. C Alt. A Alt. B Alt. C Alt. A Alt. B Alt. C Alt. A Alt. B 611.1 617.7 625.2 611.1 617.7 625.2 611.1 617.7 625.2 2533.4 2547.3 2567.8 2533.4 2547.3 2567.5 2533.4 2547.3 2567.2 3177.3 3190.6 3214.4 3177.3 3190.6 3214.1 3177.3 3190.6 3213.8 629.6 1986-January 633.6 February March 637.5 Monthly Growth Rates 1985-October -1.6 November 13.0 14.6 December 629.1 632.3 635.4 628.7 631.3 633.8 2585.0 2600.8 2615.0 2582.9 2596.5 2608.4 2581.6 2593.9 2604.6 3231.6 3246.0 3259.7 3229.7 3242.2 3254.0 3228.4 3239.8 3250.6 -1.6 13.0 14.6 -1.6 13.0 14.6 2.1 6.6 9.7 2.1 6.6 9.5 2.1 6.6 9.4 3.9 5.0 9.0 3.9 5.0 8.8 3.9 5.0 8.7 Levels in billions 1985-October November December 8.5 7.6 7.4 Rates 10.6 10.2 15.0 8.9 10.1 7.5 6.1 5.9 6.7 5.0 4.8 8.0 7.3 6.6 7.2 6.3 5.5 6.7 5.7 5.0 6.4 5.3 5.1 5.8 4.6 4.4 5.5 4.2 4.0 10.6 10.2 15.0 8.9 9.3 10.6 10.2 15.0 8.9 8.6 12.1 5.3 10.2 6.1 8.0 12.1 5.3 10.2 6.1 7.3 12.1 5.3 10.2 6.1 6.9 10.7 5.2 8.1 6.8 6.5 10.7 5.2 8.1 6.7 6.0 10.7 5.2 8.1 6.7 5.7 12.0 12.0 12.0 8.6 8.6 8.6 7.8 7.8 7.8 12.5 12.5 12.5 8.7 8.7 8.7 7.9 7.9 7.9 12.2 12.2 12.2 8.7 8.7 8.7 7.9 7.9 7.9 Sep.85 to Dec.85 Nov.85 to Mar.86 Dec.85 to Mar.86 8.7 9.6 7.9 8.7 8.6 6.5 8.7 7.8 5.5 6.2 8.0 7.4 6.1 7.2 6.4 6.1 6.7 5.8 6.0 6.5 5.6 5.9 6.0 5.0 5.9 5.6 4.6 Q4 85 to Mar.86 9.5 8.4 7.7 7.7 6.9 6.5 6.2 5.6 5.3 1986-January February March Quarterly Ave. Growth 1985-Q1 Q2 Q3 Q4 1986-01 Long-run period Long-run period Long-run period base to Nov.85 base to Dec.85 base to Q4 85 Tentative 1986 Target Ranges: 4 to 7 6 to 9 6 to 9 Chart 1 ACTUAL AND TARGETED M1 Bill ons of do lara 1680 660 -ACTUAL LEVEL * SHORT-RUN ALTERNATIVES 41- 640 -1620 -1600 -I580 - I I I SN 1984 D J I F I I I I I M A M J J 1985 I AS I I I N D J I I F I I M A M J I J 1986 A S O I 560 540 N D CHART 2 ACTUAL AND TARGETED M2 BilI ions of do lars 1 2850 -ACTUAL LEVEL * SHORT-RUN ALTERNATIVES 2750 -- 2650 B .. *'f 2550 -- 2450 -- 2350 I I 1I O N D 19B4 J I I F M A I I I M J I J 1985 I A I S I O N I I D I J I F I M A I I I M J I J 1986 I A I S I 0 2250 N D CHART 3 ACTUAL AND TARGETED M3 Bill ione of do II ars I 3600 3500 -ACTUAL LEVEL * SHORT-RUN ALTERNATIVES 3400 3300 9.5 3200 0 3100 * 3000 2900 ONDJFMAM 1984 2800 J J 1985 AS NDJ FMAMJ J 1986 AS ND Chart 4 DEBT Bi I Iions of do II ars 1 7600 -ACTUAL LEVEL ---PROJECTED LEVEL 7200 6800 6400 6000 5600 ONDJFMAMJ 1984 JASO 1985 NDJ FMAM J JAS 1986 O ND (9) Growth of M1 is expected to slow in the early months of next year under all of the alternatives, following rapid expansion in December, with growth decelerating to around 6 to 7 percent under alternative B. Relationships in the first quarter among M1, interest rates, and income are more than usually difficult to predict, however, largely because of uncertainties about when the unusual weakness of M1 velocity in recent quarters will wane or be reversed. super NOW accounts and In addition, the minimum balance requirements on MMDAs will be eliminated on January 1. Given the already advanced state of deposit deregulation, and present indications that depository institutions intend to take a conservative approach to setting rates and terms on super NOW and MMDA accounts, the staff does not expect this deregulatory step to have any appreciable immediate impact on Ml. All things considered, the velocity of M1 would be expected to decline further in the first quarter under all three alternatives, given the greenbook GNP forecast, but this is largely attributable to the boost to quarterly average growth from the recent rapid expansion of M1. The more restrained growth in M1 over the December-to-March period implied by the alternatives is roughly consistent with the results of available money demand models, and presumes an abatement of outsized inflows into demand deposits and NOW accounts but no reversal of the recent bulge. (10) Given the relatively high level of M1 expected for December, the more moderate growth of this aggregate through the first months of next year would still leave it in March, under all three alternatives, above the upper end of its tentative 4 to 7 percent growth range for 1986, as seen on the M1 chart. Specifically, under alternative B, M1 growth from the fourth- quarter 1985 base to March would be around 8-1/2 percent at an annual rate--above the upper end but within the parallel band associated with its tentative 1986 range. The modest firming of money market conditions associated with alternative C would be expected to bring M1 closer to the upper end of the tentative long-run range, while the easier reserve conditions of alternative A are likely to put M1 near the upper edge of its band. In the latter case, though, an even more sizable boost to M1 could develop as the decline in market rates relative to the return on NOW accounts, which would be expected to continue to react sluggishly to changes in money market conditions, brought to quite low levels the opportunity costs of holding a substantial portion of M1 balances. (11) Growth of M2 and M3 early next year is expected to continue at rates close to, or even a little below, the moderate pace that now appears in train for the last three months of 1985, influenced in part by the projected slowing in M1 growth. The nontransactions component of M2 is anticipated to grow somewhat faster over coming months, paced by a resumption of growth in small time deposits as outflows to NOW accounts and market instruments diminish, especially if interest rates stabilize. The elimina- tion of the minium balance requirement on MMDAs and super NOWs is expected to have little, if any, impact on M2, with shifts that might occur being predominantly within the aggregate. Under all three alternatives M2 growth from the fourth quarter of 1985 to March would be within the Committee's tentative longer-run range of 6 to 9 percent for 1986. For M3, on the other hand, expansion is expected to be relatively slow early in the year, and M3 may be at or below the lower end of its tentative range by March. Issuance of large CDs at banks could drop off substantially in the winter, in part because of sharply reduced acquisitions of tax-exempt debt after year-end and weakness in business loans as corporations emphasize long-term borrowing in view of the more favorable market environment that has recently emerged. -10(12) Growth of the total debt of nonfinancial sectors is pro- jected to slow considerably in the first quarter to a rate near the upper end of the Committee's tentative 8 to 11 percent monitoring range for this variable for 1986. Most of the expected moderation in credit growth reflects an end to the special factors affecting tax-exempt and Treasury debt in the latter part of this year. Businesses' net need for external funds should be little changed from the fourth-quarter pace as the financing gap-though widening a little--remains relatively low. Households are likely to step up their instalment borrowing to support the projected first-quarter rise in purchases of durables, particularly autos following sluggish sales in the fourth quarter. The rate of increase of mortgage indebtedness is anticipated to continue relatively strong, as the recent drop in mortgage rates works to sustain homebuilding. (13) Assuming little change in reserve market conditions as under alternative B, long-term interest rates are likely to stabilize around their recently reduced levels, or perhaps back up somewhat. further decline could develop if Some incoming economic data are weak, but the recent drop in bond yields seems already to have incorporated the nearterm impact of deficit reduction measures and weakness in certain commodity prices. Short-term rates under alternative B could reverse much of their very recent declines, which appear to have been influenced by anticipation of some easing in monetary policy by early next year. The 3-month Treasury bill rate might be expected to rise to near 7-1/4 percent. Should reserve conditions ease, as contemplated under alternative A, long-term interest rates would probably continue to drop, though probably not as rapidly as in recent weeks because further rate declines may begin to foster an actual or anticipated increase in longer-term borrowing. The 3-month -11bill rate might fall toward 6-3/4 percent, and the dollar is likely to come under renewed downward pressure on foreign exchange markets. The firming of reserve conditions contemplated under alternative C, although slight, would be quite unexpected and would prompt a substantial back up in short-term and long-term rates, at least for a time. pressure on the dollar would probably emerge. Significant upward -12- Directive language (14) Proposed language is shown below in the usual form. The proposed language contains a reference to the further deposit deregulation scheduled for the start of next year which adds a bit to the uncertainty about prospective monetary growth. OPERATIONAL PARAGRAPH In the implementation of policy for the immediate future, the Committee seeks [DEL: generally] to DECREASE SOMEWHAT (Alt. A)/ maintain (Alt. B)/ about] [DEL: INCREASE SLIGHTLY (Alt. C) the existing degree of pressure on reserve positions. This action is expected to be con- sistent with growth in M1, M2, and M3 over the period from [DEL: September to December] NOVEMBER TO MARCH at annual rates of about ____, ____, AND ____ 6 percent, RESPECTIVELY, ASSUMING LITTLE NET IMPACT ON THE AGGREGATES FROM THE FURTHER DEPOSIT DEREGULATION AT THE START OF 1986. [DEL: M1 growthover the period at around 6 is percent also anticipated, slower growth for that aggregate would be acceptable in performance, economic summer.] annual rateof an the context satisfactory of the over M1 in given the veryrapid growth Somewhat greater reserve restraint might (WOULD), somewhat lesser reserve restraint would (MIGHT), and be acceptable depending on behavior of the aggregates, taking account of appraisals of the strength of the business expansion, developments in foreign exchange markets, progress against inflation, and conditions in domestic and international credit markets. Chairman may call for Committee consultation if it The appears to the Manager for Domestic Operations that reserve conditions during the period before the next meeting are likely to be associated with -13a federal funds rate persistently outside a range of[DEL:6 to 10] ____ TO ____ percent. Selected Interest Rates December 16, Percent 13.44 10.39 13.84 11.30 13.81 11.36 15.30 12.70 11.44 9.86 15.37 12.87 14.68 13.14 12.31 10.81 11.19 8.58 11.95 9.46 11.89 9.75 13.23 11.30 10.31 8.96 13.57 11.27 13.29 11.64 11.14 9.30 11.06 10.90 10.56 11.57 11.50 11.56 11.52 12.98 12.88 10.69 10.40 13.07 13.06 13.64 13.18 11.54 11.01 10.61 10.50 10.50 10.43 10.55 11.05 11.38 11.51 11.86 11.45 11.47 11.81 12.78 12.76 13.17 9.96 10.07 10.23 13.03 13.05 13.48 13.08 12.92 13.17 10.84 10.63 11.43 10.85 10.16 11.47 11.05 10.45 12.75 12.25 11.60 9.85 9.46 9.18 13.07 12.65 11.88 13.20 12.91 12.21 10.83 10.56 9.89 1984--High Low 11.77 7.95 10.65 7.71 10.76 8.01 11.09 8.39 11.71 8.24 11.35 8.04 10.72 8.38 13.00 1985--High Low 8.75 7.13 8.65 6.77 9.03 6.92 9.21 7.07 9.13 7.34 8.83 7.22 8.31 7.00 10.75 -- Nov. Dec. 9.43 8.38 8.61 8.06 8.81 8.28 9.01 8.60 9.18 8.60 9.01 8.39 9.34 8.55 11.77 1985--Jan. Feb. Mar. 8.35 8.50 8.58 7.76 8.27 8.52 8.00 8.39 8.90 8.33 8.56 9.06 8.14 8.69 9.02 7.99 8.46 8.74 8.00 7.80 9 84 1 7.97 11.00 9.50 10.92 Apr. May June 8.27 7.97 7.53 7.95 7.48 6.95 8.23 7.65 7.09 8.44 7.85 7.27 8.49 7.92 7.44 8.31 7.80 7.34 7.97 7.71 7.21 10.50 10.31 9.78 10.49 9.75 9.05 July Aug. Sept. 7.88 7.90 7.92 7.08 7.14 7.10 7.20 7.32 7.27 7.31 7.48 7.51 7.64 7.81 7.93 7.58 7.73 7.83 7.03 7.08 7.10 9.50 9.50 9.50 9.18 9.31 9.37 10.31 10.33 10.37 10.50 10.56 10.61 11.64 11.76 11.87 9.20 9.44 9.61 11.94 12.04 12.11 12.06 12.19 12.19 9.68 Oct. Nov. 7.99 8.05 7.16 7.24 7.33 7.30 7.45 7.33 7.88 7.81 7.81 7.84 7.15 2 7. 2p 9.50 9.25 8.88 10.24 9.78 10.50 10.06 11.82 11.35 9.54 9.50 9.22 11.97 11.51 12.11 11.73 9.50 9.38 9.52 9.52 Aug. 28 7.78 7.05 7.18 7.39 7.77 7.69 7.07 9.50 9.19 10.14 10.42 11.73 9.43 11.92 12.11 9.45 Sept. 4 11 18 25 7.88 7.80 7.85 7.96 7.09 7.22 7.19 6.94 7.25 7.40 7.37 7.14 7.43 7.60 7.57 7.42 7.82 7.93 8.01 7.90 7.74 7.81 7.93 7.80 7.07 7.05 7.12 7.18 9.50 9.50 9.50 9.27 9.49 9.45 9.29 10.20 10.45 10.43 10.36 10.43 10.68 10.65 10.61 11.89 11.92 11.91 11.80 9.41 9.60 9.69 9.74 11.97 12.27 12.22 11.97 12.15 12.24 12.21 12.17 9.52 9.57 9.51 9.49 2 9 16 23 30 8.12 7.84 8.03 8.14 7.89 7.01 7.08 7.21 7.20 7.22 7.11 7.31 7.36 7.33 7.38 7.39 7.46 7.48 7.43 7.47 7.84 7.85 7.92 7.91 7.90 7.76 7.74 7.87 7.85 7.81 7.11 7.09 7.14 7.16 7.17 9.50 9.50 9.50 9.50 9.22 9.32 9.33 9.20 9.20 10.28 10.37 10.31 10.16 10.14 10.55 10.63 10.58 10.43 10.41 11.92 11.96 11.81 11.73 11.52 9.72 9.61 9.52 9.47 9.40 12.02 12.05 11.92 11.87 11.72 12.17 12.17 12.13 12.07 12.01 9.53 9.66 9.51 9.48 9.30 6 13 20 27 8.30 7.95 8.13 7.71 7.22 7.26 7.27 7.21 7.31 7.29 7.32 7.29 7.37 7.32 7.33 7.32 7.78 7.77 7.84 7.84 7.84 7.84 7.84 7.81 7.20 9.50 9.50 9.50 9.50 9.03 8.92 8.87 8.76 9.97 9.82 9.79 9.65 10.22 10.10 10.07 9.95 11.42 11.42 11.30 11.25 9.36 9.25 9.08 9.20 11.62 11.57 11.27 11.37 11.90 11.79 11.64 11.58 9.40 9.37 9.36 9.38 4 11 8.49 8.03 7.22 7.19 7.30 7.24 7.34 7.25 7.92 7.90 7.92 7.91 7.22 7.25 9.50 9.50 8.74 8.58 9.65 9.46 9.90 9.75 11.27 10.95 9.14 8.96 11.32 10.77 11.50 11.31 9.30 9.13 7.25 7.08 6.98 7.31 7.07 6.97 7.35 7.10 7.00 7.95 7.74 7.67 7.93 7.80 7.78 9.50 9.50 9.50 8.75 8.38 8.26p 9.65 9.27 9.21p 9.90 9.58 9.53p Oct. Nov. Dec. Daily--Dec. 6 12 13 7 .99p 7.90 7 .86p 7.19 7.26 7.21 NOTE Weekly data for columns 1 through 11 are statement week averages Data In column 7 are taken from Donoghue's Money Fund Report Columns 12 and 13 are 1-day quotes for Friday and Thursday, respectively, 9.50 9.50 1985 gages (FRMs) with 80 percent loan to-value ratios at a sample of savings and loans Column 18 Is the average Initial contract rate on new commitments for one-year, adjustable-rate mortgages (ARMs) at S&Ls offering both Strictly Confidential (FR)Class IIFOMC 16, 1985 DEC. Money and Credit Aggregate Measures Seasonally adjusted Prowd M2 M1 1 ytock measure and liquid asets nontran actlons components In M2 3 ~ IIn M3 only 4 L M3 Bank credit total loans and DomnetIc nonfinancial d U. 2 other goenment 2 totai Istmen 5 - 8 7 10 PERCENT AUNOUA GROITH: ANNUALLI (QIV TO QiV) 1982 1983 1984 8.8 10.4 5.2 9.1 12.2 7.7 9.3 12.8 8.6 13.6 1.1 22.1 10.0 10.0 10.4 10.2 10 11.8 8.1 10.6 10.8 17.3 21.5 15.9 7.2 8.5 13.6 9.1 11.2 14.1 QOARTERLT AVERAGE 1984 TR8 QY. 1ST QTR. 1985 210 QTR. 1985 380 QTR. 1985 3.2 10.6 10.2 15.0 9.1 12.1 5.3 10.2 10.9 12.5 3.8 8.7 18.7 5.5 4.8 -0.1 11.0 10.7 5.2 8.1 9.7 10.1 5.8 8.7 9.4 10.1 9.7 9.6 16.1 15.2 12.3 14.6 13.3 13.1 11.6 11.6 14.0 13.6 11.8 12.2 NONTHLT 1984--L1. DBEC 12.0 10.2 14.0 13.0 14.6 13.9 15.5 19.0 14.3 14.2 0 13.2 3.3 9.8 20.3 17.6 14.7 15.0 16.0 15.6 1985--Jl. B.. BaB. APl. NA1 JOu3 JULY AUG. SEPT. OCT. 0Vo. P 9.0 14.3 5.7 5.9 14.0 19.8 9.3 20.3 11.9 -1.6 13.0 13.8 11.1 4.3 -0.9 8.5 13.7 8.6 11.3 7.1 2.1 6.6 15.2 10.1 3.8 -3.1 6.9 11.9 8.4 8.4 5.6 3.3 4.5 -3.3 -3.1 12.2 5.0 4.2 -2.1 -10.1 3.5 22.2 10.9 -1.1 10.2 8.1 5.9 0.3 7.6 10.5 4.8 9.7 10.1 3.9 5.0 7.7 10.6 9.3 0.6 5.7 9.6 6.1 12.4 9.9 6.6 12.9 11.6 4.9 13.4 9.5 10.9 6.5 8.2 2.0 16.3 15.4 12.6 8.5 11.8 15.4 14.1 16.6 14.3 7.6 8.8 24.8 13.0 10.8 11.4 12.0 11.3 11.5 11.3 11.4 12.1 12.5 13.5 13.5 11.2 10.8 12.0 12.2 12.0 12.6 12.0 11.0 11.6 16.1 ONTHL3 LEVELS (SBILLIONS) 1985--JULT AUG. SEPT. OCT. iOV. P 595.8 605.9 611.9 611.1 617.7 2490.6 2514.1 2528.9 2533.4 2547.3 1894.8 1908.1 1917.0 1922.3 1929.5 624.7 626.5 638.1 643.9 643.3 3115.3 3140.6 3167.0 3177.3 3190.6 3690.2 3728.2 3759.1 1819.0 1828.8 1841.3 1844.4 1869.4 1878.5 4877.9 4924.1 4973.7 5025.3 5081.8 6356.4 6420.2 6479.3 6541.9 6629.8 WlEKLr LEVELS (IBILLIONS) 1985--OV. 4 11 18 25P 612.2 613.8 616.6 620.8 DEC. 1/ 2/ 2P 1 1496.1 1505.6 1516.6 1548.0 626.1 ANIUAL RATES FOR BANK CREDIT ARE ADJUSTED FOB A TRAISFER OF LOANS FRON CONTINBETAL ILLINOIS I*TIOIML BANK TO TBB FDIC BEGINNING SEPTERBER 2b, 1984. DEBT DATA ARE ON A HONTHLY AVEBAGR BASIS, nRBITED R8 AVEBAGING END-OF-MONTH LETELS OF ADJACENT HORT85. AND HAVE 88H8 ADJUSTED TO REHOVE DISCONTINUITIES. P-PRELIHINAI Components of Money Stock and Related Measures Billions of dollars, seasonally adjusted unless otherwise noted Curency Period Demand Other Ovmnght checkable RPS and MMOAs Savings denomination deposits deposits Eurodollar NSA depoits time . deposits' ind broker dealerf NSA Tkm Eurodollar Svings tions time NSA NSA bonds only deposits 9 10 11 12 13 Shortterm 1985 Commer- leasury cllt paper securltils 14 Senker ccep tfnce 1I 15 8 359.4 310.3 290.6 863.1 774.1 878.9 187.6 138.2 161.7 51.8 43.2 57.7 332.8 326.0 410.7 34.5 48.0 69.9 82.5 89.3 81.9 67.8 70.9 73.9 182.7 213.5 269.4 107.8 127.5 158.7 43.4 43.7 43-86 402.4 415.1 290.7 288.6 878.5 885.6 162.0 167.5 58.3 62.7 410.7 416.2 70.7 69.7 81.9 83.2 73.9 74.1 268.0 267.2 157.6 161.8 03.04 43.2 62.9 69.6 68.2 433.7 448.3 457.9 288.6 289.4 288.6 881.9 877.6 878.6 171.9 175.1 177.6 65.0 62.2 59.5 416.9 419.3 423.6 65.0 65.7 68.9 81.1 81.3 84.7 74.4 74.9 75.3 266.7 270.3 275.9 159.6 164.8 169.8 42.8 44.6 46.4 155.3 157.3 160.3 59. 4 64.0 63.0 460.3 463.8 475.1 287.8 289.3 292.1 885.3 892.0 894.2 176.2 172.2 175.4 59.6 63.5 67.1 427.3 428.2 024.1 71.9 68. 8 66.9 80.7 80.8 78.3 75.8 76.2 76.6 277.8 276.8 284.6 168.9 168.6 164.7 46.1 44.8 42.8 260.9 264.1 266.0 163.6 168.9 171.3 62.5 66.1 66.6 484.1 492.1 496.7 296.0 300.3 301.7 888.5 878.4 874.4 175.8 176.8 176.7 65.0 63.6 62.3 420.0 421.3 428.5 65.0 67.4 70.3 77.4 78.3 78.8 76.7 77.2 78.1 284.4 285.5 287.1 171.1 182.0 184.2 42.7 42.9 42.8 264.0 266.2 172.4 175.7 67.6 69.5 501.1 506.4 304.4 305.7 871.6 871.5 176.9 176.4 63.3 64.5 433.3 437.5 70.3 72.9 78.0 77.0 ~ 2 3 133.4 147.3 157.9 237.5 243.8 246.6 101.3 130.2 143.9 40.7 53.6 57.5 14.4 376.2 403.2 1984-0W. DEC. 157.9 158.7 246.8 248.6 143.9 146.0 58.1 57.6 1985-JAW. FEB. NAB. 159.4 160.5 161.3 249.1 251.7 251.9 149.0 151.8 153.6 APR. NAT JOLT 161.7 163.1 164.5 252.5 255.8 260.7 AUG. SEPT. 165.4 167.1 167.9 168.8 169.9 1982 1983 1984 bim RPa 16, 7 4 1 AWNnALLT(4Tf denomination mutual funds, NSA Institugineal purpose, DEC. 5 QTR): ONTHLY OCT. NOT. 1/ P INCLUDES RETAIL REPURCHASE AGREEM88 TS. ALL IBA AND KBOGH ACCOUNTS AT COHMERCIAL BARKS AND THRIPr ZISTTUTZONS ARE SUBTRACTED FRO7 SHALL TIRE DEPOSITS. 2/ 3/ EXCLUDES IRA AHD KEOGH ACCOUNTS. NET OF LARGE DENOHINATION TIME DEPOSITS P-PRELIMINART HELD dl RONEB MARKET MUTUAL FUNDS AND THRIFT INSTITUTIONS. STRICTLY CONFIDENTIAL (FR) CLASS II-FOMC Net Changes in System Holdings of Securities Millions of dollars, not seasonally adjusted December 16, 1985 Treasury bills net change' Period Treasury coupons net purchases' -- Federal agencies net purchases' 1 within 1-vear -- total weinin 1-year 1,918 169 6,432 1,326 1,295 -339 -735 8,409 3,962 462 -350 -3,446 -951 2,039 -9,257 2,766 12 -350 -246 3,038 1,171 -1,815 -53 -1,578 350 -265 1,180 -732 -718 2,615 10 307 510 813 1,207 -5,192 4,785 6 -5,445 1,970 -1,563 1,977 -10,048 491 -424 4,880 808 200 1,130 335 277 164 1985--QTR. I II III -2,044 7.183 4,377 465 846 6 100 108 6 -96 -- Oct. Nov. Dec. LEVEL--Dec. - S 5-10 I over 10 1-5 217 133 -942 2,099 -265 830 Oct. Nov. 4 11 18 25 2,615 10 307 510 2 9 16 23 30 356 6 6 650 184 - 131 -350 -265 6 13 20 27 185 551 615 -232 4 11 3,384 442 12 86.9 70 1,982 -316 1,484 600 1,657 1984-QTR. II III IV -200 3,056 1,521 2,462 684 1,461 -5,445 1,450 4,564 2,768 2,803 3,653 3,440 = July Aug. Sept. 2,035 8,491 8,312 16,342 6,964 811 379 307 383 441 703 393 388 890 236 1985--May June Net RPs' over 10 2,138 1,702 1,794 1,896 1,938 1985--Sept. total 5-10 -3,052 5,337 5,698 13,068 3,779 1980 1981 1982 1983 1984 - Net change outright holdings total' -265 350 -- 535 551 68 9,939 -646 -8,688 4,227 3,699 1,995 -6,194 IRQ1 7 -7 1 -615 300 300 - 184 315 143 868 345 1,552 20 0 20 35.5 35. 0 11. 14 58 15 8. 21 1 Change from end of period to end of period 2 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 4 Outright transactions in market and with foreign accounts only Excludes redemptions and maturity shifts QA /. 2.5 4f1 LI d R8 8 7 12,098 -2 5 In addition to the net purchase of securities, also reflects changes in System holdings of bankers' acceptances, direct Treasury borrowing from the System and redemptions (-) of agency and Treasury coupon issues 6 Includes changes In RPs(+), matched sale purchase transactions(-) and matched purchase sale transactions(+) 

Federal Reserve (1985, December 16). Bluebook. Bluebooks, Federal Reserve. https://whenthefedspeaks.com/doc/bluebook_19851217

@misc{wtfs_bluebook_19851217,
  author = {Federal Reserve},
  title = {Bluebook},
  year = {1985},
  month = {Dec},
  howpublished = {Bluebooks, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/bluebook_19851217},
  note = {Retrieved via When the Fed Speaks corpus}
}