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. All scanned images were deskewed (to remove the effects of printer- and scanner-introduced tilting) and lightly cleaned (to remove dark spots caused by staple holes, hole punches, and other blemishes caused after initial printing). 2 A two-step process was used. An advanced optimal character recognition computer program (OCR) first created electronic text from the document image. Where the OCR results were inconclusive, staff checked and corrected the text as necessary. 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 19, Strictly Confidential (FR) 1986 Class I FOMC MONETARY POLICY ALTERNATIVES Prepared for the Federal Open Market Committee By the staff Board of Governors of the Federal Reserve System September 19, 1986 STRICTLY CONFIDENTIAL (FR) CLASS I - FOMC MONETARY POLICY ALTERNATIVES Recent developments (1) Growth in the broader monetary aggregates slowed in August. However, with expansion at annual rates of around 10-3/4 percent for M2 and 8-1/2 percent for M3 last month, both aggregates grew more rapidly over July and August than their 7 to 9 percent paths for the June-to-September period. In August M2 and M3 were close to the upper limits of their respec- tive longer-run ranges. Data for early September suggest a further slowing of M2, while M3 seems to be expanding at around its August pace. In contrast to the broader aggregates, M1 accelerated in August, to a 20-3/4 percent annual rate, and growth over July and August was at about the advanced pace recorded over the second quarter. M1 growth appears to have slackened considerably in the early weeks of September. (2) The slowing of M2 in August mainly reflected smaller in- flows into money market funds and less rapid issuance of overnight RPs by commercial banks--the latter associated with reduced purchases of government securities. Growth of deposits in M2 remained near the robust pace that has prevailed throughout the summer, as reductions in average deposit offering rates have continued to lag declines in market yields, especially for the most liquid components of M2. Although more institutions have reduced offering rates on NOW and savings deposits below their former regulatory ceilings, most still appear to be reluctant to do so. The overall flow into OCDs, savings deposits, and MMDAs strengthened in August, while runoffs from small time deposits accelerated. Expansion in other checkable deposits, at nearly a 40 percent annual rate, was especially -2- KEY MONETARY AGGREGATES (Seasonally adjusted annual rates of growth) I_~ June QIV'85 to Auust July August to August 14.8 16.7 20.8 18.9 14.5 9.4 12.9 10.8 11.9 8.9 8.6 13.0 8.6 10.8 10.6 11.0 13.7 12.4 3.8 13.0 13.5 13.4 Nonborrowed reserves1 22.0 23.3 18.7 21.2 20.8 Total reserves 21.4 25.3 19.6 22.7 19.0 Monetary base 9.2 8.8 12.0 10.5 9.5 Adjustment and seasonal borrowing 273 363 407 Excess reserves 931 910 736 June Money and credit aggregates Domestic nonfinancial debt Bank credit 13.0 Reserve measures Memo: (Millions of dollars) 1. Includes "other extended credit" from the Federal Reserve. NOTE: Monthly reserve measures, including excess reserves and borrowing, are calculated by prorating averages for 2-week reserve maintenance periods that overlap months. Data incorporate adjustments for discontinuities associated with implementation of the Monetary Control Act and other regulatory changes to reserve requirements. -3- robust, as their opportunity costs reached unprecedented lows. Expansion in demand deposits also remained brisk in August, and currency growth strengthened. Commercial banks supplemented strong inflows to core deposits with increased issuance of managed liabilities. Bank CDs expanded for the first time in six months, helping to fund sizable acquisitions of tax-exempt securities and a pickup in loan growth. (3) The debt of domestic nonfinancial sectors accelerated to nearly a 14 percent annual rate in August, bringing growth since the fourth quarter of 1985 to 13 percent, well above the 8 to 11 percent range for 1986. Issuance of tax-exempt debt was especially heavy as state and local units rushed to market in advance of restrictions included in proposed tax-reform legislation, which would take effect September 1; subsequently, tax-exempt borrowing has dropped off sharply. Business borrowing in shorter- term markets picked up appreciably in August, while corporate bond issuance remained fairly strong; borrowing in long-term markets has decreased markedly in September, however, following a back up in bond yields. A robust pace of equity retirements has continued to boost overall business borrowing. And household debt appears to be expanding at a strong clip, with net mortgage formation proceeding rapidly and consumer credit receiving a boost from the latest round of low-rate automobile finance programs. (4) Growth of nonborrowed and total reserves in August continued at annual rates approaching 20 percent, reflecting the strength in transactions deposits. Reserve paths were constructed throughout the intermeet- ing period assuming $300 million of adjustment plus seasonal borrowing. Borrowing (after allowance for special situation credit) was close to this level in the maintenance period ending in the week following the last Committee meeting. However, such borrowing averaged $519 million in the -4subsequent maintenance period. There was a substantial upward revision in estimates of required reserves on the final day of that period, but with the money market suggesting ample reserve availability, the Desk met only a portion of the projected need; the reserve shortfall did not show through until late in the day. In the first eight days of the current period, borrowing has dropped back to around $380 million. (5) Federal funds generally have traded around or a little below 5-7/8 percent since the one-half percentage point reduction in the discount rate that took effect shortly after the August 19 FOMC meeting. Shorter-term interest rates declined 30 basis points or so following the discount rate cut, and the prime rate was reduced one-half percentage point. In bond markets, rates were little changed immediately after the discount rate action, but subsequently have backed up by as much as 65 basis points. Concerns about inflation apparently began to emerge among market participants, associated in part with signs that OPEC was succeeding in restraining output. At the same time, evidence of greater economic strength and rapid money growth both domestically and abroad, along with various statements by foreign authorities, seemed to make near-term monetary easing in the United States and other major industrial countries unlikely. In recent days, further increases in bond yields have accompanied an appreciable decline in the foreign exchange value of the dollar, which raised market concerns about demands for dollar assets. Spurred in part by the rise in bond yields, major stock price indexes fell 4 to 8 percent over the intermeeting period. (6) The dollar fell 1-3/4 percent on balance against major foreign currencies since the last Committee meeting. The dollar remained steady after the August discount rate cut and even firmed in early September. -5- The significant decline in the past week followed strong statements by German and Japanese officials ruling out further monetary easing in their countries as well as statements here and abroad recognizing the potential for a weaker dollar under these circumstances. . Precious metals prices continued to rise over the intermeeting period, bringing their total increases since late July to 15 to 30 percent. Political developments relating to South Africa and threatening supply disruptions apparently accounted for a significant portion of these price rises, but the decline in the dollar and emerging inflation concerns in the U.S. seem to have contributed as well. Policy alternatives (7) The table below presents three alternative specifications for growth of the monetary aggregates from August to December together with associated federal funds rate ranges. 1 (More detailed data, including im- plied growth for each alternative from last year's fourth-quarter base of the annual ranges to the fourth quarter of this year, and from September to December, are shown on the table and charts on the following pages.) Alt. A Alt. B Alt. C 9-1/2 8-1/2 14 8-1/2 8 12 7-1/2 7-1/2 10 3 to 7 4 to 8 5 to 9 Growth from August to December M2 M3 M1 Associated federal funds rate range (8) Under Alternative B, which assumes continuation of the cur- rent degree of pressure on reserve positions, growth in M2 and M3 expected over the next four months would leave these aggregates at the 9 percent upper ends of their annual ranges. With the moderate easing or tightening of reserve pressures assumed for alternatives A and C, respectively, the broader aggregates would be expected to move above or below the upper bounds of their annual ranges, with the gap widening as the year comes to a close. However, even under these alternatives, given the lateness in the year, annual growth of the broad aggregates on a fourth-quarter average basis 1. August rather than September is used as the base month for the money growth specifications because at this point the levels of the monetary aggregates in September shown in the detailed table are largely projected. Alternative Levels and Growth Rates for Key Monetary Aggregates M2 M3 M1 Alt. A Alt. B Alt. C Alt. A Alt. B Alt. C Alt. A Alt. B Alt. C 2699.1 2723.4 2699.1 2723.4 2699.1 2723.4 3375.4 3399.5 3375.4 3399.5 3375.4 3399.5 676.1 687.8 676.1 687.8 676.1 687.8 September 2740.6 2740.4 2740.2 3424.0 3423.7 3423.4 694.1 694.0 693.9 October 2763.2 2761.0 2758.7 3449.4 3447.7 3445.9 702.9 701.7 700.5 November 2786.5 2781.2 2775.9 3474.0 3470.4 3466.9 711.4 708.9 706.4 December 2809.7 2800.7 2791.6 3497.5 3491.8 3486.0 720.0 715.5 710.9 12.9 10.8 7.6 12.9 10.8 7.5 12.9 10.8 7.4 13.0 8.6 8.6 13.0 8.6 8.5 13.0 8.6 8.4 16.7 20.8 11.0 16.7 20.8 10.8 16.7 20.8 10.6 9.9 10.1 10.0 9.0 8.8 8.4 8.1 7.5 6.8 8.9 8.6 8.1 8.4 7.9 7.4 7.9 7.3 6.6 15.2 14.5 14.5 13.3 12.3 11.2 11.4 10.1 7.6 Quarterly Ave. Growth Rates 1985-Q4 6.1 1986-Q1 4.3 Q2 10.5 Q3 11.1 Q4 9.6 6.1 4.3 10.5 11.1 8.8 6.1 4.3 10.5 11.1 8.0 6.6 7.6 9.0 10.1 8.7 6.6 7.6 9.0 10.0 8.3 6.6 7.6 9.0 10.0 7.9 10.7 7.7 15.8 17.5 14.8 10.7 7.7 15.8 17.5 13.2 10.7 7.7 15.8 17.5 11.7 June 86 to Sept.86 Aug. 86 to Dec. 86 Sept.86 to Dec. 86 10.5 9.5 10.1 10.5 8.5 8.8 10.4 7.5 7.5 10.2 8.6 8.6 10.1 8.1 8.0 10.1 7.6 7.3 16.4 14.0 14.9 16.3 12.1 12.4 16.3 10.1 9.8 8.9 8.9 9.3 9.2 8.9 8.8 9.0 9.0 8.9 8.8 8.7 8.7 9.1 9.1 9.1 9.1 9.1 9.1 9.0 9.0 9.1 9.1 8.8 8.9 14.5 14.3 14.8 14.7 14.5 14.3 14.2 14.3 14.5 14.2 13.5 13.8 Levels in billions 1986-July August Monthly Growth Rates 1986-July August September October November December Q4 Q4 Q4 Q4 85 85 85 85 to to to to Aug. 86 Sept.86 Dec. 86 Q4 86 1986 Ranges: 6 to 9 6 to 9 3 to 8 CHART 1 ACTUAL AND TARGETED M2 81 1 lone of doI Iar I 2850 2800 ACTUAL LEVEL -- SSHORT RUN ALTERNATIVES 2750 -4 2700 2650 -- 2600 -- 2550 -- 2500 I O I N 1985 I D J I F M I L I1 A M I J J 1986 I I A S I~ O 2450 , N D CHART 2 ACTUAL AND TARGETED M3 BII Ilone of dol lore 13600 - ACTUAL LEVEL * SHORT RUN ALTERNATIVES 3500 , 3400 . . , .,/'* . , 3300 . 3200 3100 N 1985 D J F M A M J J 1986 A S 0 N D CHART 3 ACTUAL AND TARGETED M1 B I I lons of do I ar 730 *A- 720 *B - -- ACTUAL LEVEL * SHORT RUN ALTERNATIVES *- 710 - 700 - 690 - 680 S- 00000000 670 - 660 - 650 -- 640 - 630 - 620 - 610 0C~ ** I S N 1985 I D J F I I I I M A I M I l I A J J 1986 S 32 S I l D 0 N 600 Chart 4 DEBT Bill Ions of dol lre 17700 - ACTUAL LEVEL ,- 7500 - 7300 - 7100 1 6900 -- 6700 I S I t N 1985 D I J I I F M A i i M 6500 I J J 1986 A S 0 N D -8- would not be anticipated to diverge greatly from the upper limits of their long-run annual ranges. M1 growth for the year under all the alternatives is projected to be not far from the 14-1/2 pace registered so far this year. (9) Under alternative B, reserve paths would continue to be constructed assuming $300 million of adjustment plus seasonal borrowing at the discount window. Federal funds would be expected to continue to trade around 5-7/8 percent, confirming expectations of no near-term policy change, and the Treasury bill rate would remain near 5-1/4 percent. Bond yields should fluctuate around recent higher levels, with financial markets continuing to be unusually sensitive to developments affecting the economic and policy outlook. While forthcoming inflation indicators may suggest only a moderate uptick in price pressures, as in the staff forecast, strength in near-term data on economic activity, expansion of broad money measures along the upper bounds of their ranges, and the continued downtrend in the dollar in foreign exchange markets expected under this alternative would tend to limit the potential for retracing the recent climb in bond yields. (10) M2 growth under alternative B is expected to average around 8-1/2 percent at an annual rate over the remainder of the year, appreciably below its average pace in July and August, but still well in excess of income growth. Based on the staff greenbook forecast, M2 velocity would decline further--at a 3 percent annual rate in the fourth quarter. With money market rates staying around current levels under alternative B, inflows from market instruments to liquid retail accounts should continue to be stimulated by their relatively attractive returns, though flows would tend to be somewhat smaller than in recent months, reflecting the diminishing impacts of earlier declines in market rates. In addition, opportunity costs may widen a bit as offering rates adjust down a little more. The expectation -9of a moderate slowing of inflows to retail M2 accounts is based on an assessment that rates on savings and regular NOW accounts will continue to be reduced very sluggishly over the balance of the year, despite unusually low spreads to market rates; should depository institutions show more willingness to cut offering rates, M2 growth could slow somewhat more. Growth in M2 also may be restrained by further ebbing in the expansion in overnight RPs as net purchases of Treasury securities by banks continue to abate as interest rates stabilize. (11) M3 also is expected to decelerate from August to December in the specifications of alternative B--to an 8 percent annual rate. This slowing would be accounted for entirely by the reduced growth in M2; the non-M2 component of M3 is projected to continue expanding at the average pace of recent months. Bank credit growth should slow substantially over the balance of the year as loan demand remains moderate and acquisitions of tax-exempt as well as Treasury securities drop off. expansion, meanwhile, Thrifts' asset is expected to pick up only marginally in coming months. (12) M1 growth, though expected to moderate somewhat from its July-August pace, is still likely to be quite rapid over the rest of the year under alternative B. With offering rates on NOW accounts adjusting only slowly, inflows to other checkable deposits would continue to be boosted by funds shifting from small time deposits as well as from market instruments, though abating from their recent extraordinary pace. Growth in demand deposits should taper off, as holdings become more fully adjusted to the earlier declines in short-term market rates. Based on the staff's GNP projection, transactions needs are likely to increase in the fourth quarter at around the third-quarter pace. Reflecting the influence of the -10previous narrowing in opportunity costs of M1 balances, M1 velocity is expected to contract at a 7 percent annual rate in the fourth quarter, after a 12 percent decline in the current quarter. (13) Debt growth also may moderate in coming months, though re- maining much faster than GNP through the fourth quarter. A marked slowdown from the elevated August pace already is in process, concentrated in state and local government borrowing. In addition, once current rate concessions expire, the decline anticipated in car sales in the fourth quarter is likely to be associated with reduced consumer installment borrowing. Household mortgage borrowing should be well maintained over the rest of the year with continued strong single-family housing activity. Federal credit demands will remain heavy in coming months, especially in the coupon area, once the debt ceiling is raised. Nonfinancial business borrowing could pick up with some widening of the financing gap and possibly an increase in corporate financial restructuring activity in advance of tax reform. Overall, debt of domestic nonfinancial sectors is projected to expand at a 12 percent rate from August through year end, implying growth for the year on a fourthquarter average basis of 13 percent, cmpared with the 11 percent upper bound of the Committee's monitoring range. (14) Alternative A assumes either a reduction in discount borrow- ings to a near-frictional level of $150 million or a one-half percentage point cut in the discount rate with borrowings kept at $300 million. In either case, the funds rate would gravitate into the 5-1/4 to 5-1/2 percent area. Short-term market rates would adjust downwards, with the 3-month bill rate likely moving below 5 percent. While bond yields might come down initially, they would probably remain above the low points reached in the spring; indeed, recent experience suggests some risk that long-term -11yields could even back up in the face of a decline in short-term rates if the easing in policy taken together with signs of strength in the economy and prices exacerbated fears of inflation. Absent monetary easing abroad, lower short-term rates would tend to lessen the attractiveness of dollar assets, and any heightening of inflationary concerns in this environment could place the foreign exchange value of the dollar under considerable downward pressure. (15) Under alternative A, growth in M2 and M3 of around 9-1/2 and 8-1/2 percent, respectively, would be anticipated from August through December. Such growth would leave these aggregates a little above the upper band of their annual ranges. Offering rates on retail deposits and money market mutual funds would become even more favorable, at least for a while, fostering heavy inflows into these instruments. Absent a policy reversal in coming months, deposit flows are likely to remain strong into early 1987 supported in part by the emergence of somewhat more robust economic activity than in the staff projection. M1 growth from August to December would be expected to continue near its rapid pace for the year to date, bringing growth for the year to 14-3/4 percent. (16) $500 million. Alternative C assumes an increase in discount borrowing to Federal funds might return to the 6-1/4 to 6-1/2 percent area. This tightening of reserve conditions would enhance the odds that M2 and M3 would come in within their ranges for this year. Growth in these aggregates would be expected to slow to a 7-1/2 percent rate over the rest of the year. M1 might decelerate significantly, as rates on small time deposits rose relative to those on NOW accounts. Even so, with the opportunity costs of holding NOW accounts remaining quite low, growth of M1 over the August-to- -12December period might still average around 10 percent at an annual rate, resulting in growth for the year of nearly 14 percent. (17) Since a near-term tightening action is not currently built into money market rates, 3-month bills could back up to around 5-3/4 percent. Private short-term rates could rise by more than Treasuries if concerns intensify about the prospects of certain borrowers and lending institutions. Bond rates also would tend to back up, though the reaction in long-term markets might tend to be muted to the extent that concerns about inflationary Orospects were eased. The dollar could tend to strengthen, at least for a time, on foreign exchange markets. -13Directive language (18) Draft language for the operational paragraph, with the usual alternatives, is shown below. The draft follows the format used at the July and August meetings in specifying numerical growth rates for M2 and M3 but not for Ml. As noted on page 6, August is suggested as the base for the money growth specifications. With regard to the issue of inter- meeting adjustments in the degree of reserve pressure, the draft retains the symmetrical language of the last directive but could be adapted to an asymmetrical approach (with the appropriate use of "might" and "would") as in a number of earlier directives. OPERATIONAL PARAGRAPH In the implementation of policy for the immediate future, the Committee seeks to decrease slightly (SOMEWHAT) (Alt. A)/MAINTAIN (Alt. B)/INCREASE SOMEWHAT (Alt. C) the existing degree of pressure a possiblity the of account taking on reserve positions,[DEL: rate.] discount the in change This action is expected to be consistent June to September] with growth in M2 and M3 over the period from[DEL: AUGUST TO DECEMBER at annual rates of about ____ AND ____ [DEL: 7 to 9] percent, RESPECTIVELY. While growth in M1 is expected to moderate second quarter] from the exceptionally large increase during the[DEL: PAST SEVERAL MONTHS, that growth will continue to be judged in the light of the behavior of M2 and M3 and other factors. Somewhat greater or lesser reserve restraint might/(WOULD) be acceptable depending on the behavior of the aggregates, the strength of the business expansion, developments in foreign exchange markets, progress against inflation, and conditions in domestic and -14international credit markets. consultation if it The Chairman may call for Committee appears to the Manager for Domestic Operations that reserve conditions during the period before the next meeting are likely to be associated with a federal funds rate persistently 4 to 8] percent. outside a range of ____ TO ____ [DEL: Selected Interest Rates September 22, 1986 Percent 1985--High Low 8.98 7.13 8.65 6.77 9.03 6.92 9.21 7.06 9.13 7.34 8.83 7.22 8.31 7.00 10.75 9.50 11.19 8.24 11.95 9.07 11.89 9.34 13.23 10.62 10.31 8.85 13.57 10.52 13.29 11.09 1986--migh Low 9.55 5.82 7.21 5.16 7.30 5.23 7.35 7.94 5.31 5.47 7.91 5.60 7.22 5.34 9.50 7.50 8.60 6.24 9.38 7.02 9.52 7.16 10.83 9.15 8.72 7.32 10.97 9.52 10.99 9.86 Oct. Nov. Dec. 7.99 8.05 8.28 7.16 7.24 7.10 7.33 7.30 7.14 7.45 7.33 7.88 7.81 7.16 7.80 7.81 7.84 7.87 7.15 7.21 7.23 9.50 9.50 9.50 9.25 8.88 8.40 10.24 9.78 9.26 10.50 10.06 9.54 11.82 11.35 10.93 9.54 9.22 8.96 11.97 11.51 10.83 12.14 11.78 11.26 1986--Jan. Feb. 7.07 7.06 6.56 7.17 7.11 6.57 7.21 7.11 6.59 7.82 7.69 7.24 7.78 7.70 7.30 7.15 7.11 6.96 9.50 9.50 9.10 8.41 8.10 7.30 9.19 8.70 Mar. 8.14 7.86 7.48 7.78 9.40 8.93 7.96 10.74 10.21 9.41 8.50 7.99 7.74 10.79 10.45 9.86 10.88 10.71 10.08 Apr. Hay 6.99 6.85 6.06 6.15 6.08 6.19 6.06 6.25 6.60 6.65 6.75 6.72 6.58 6.22 8.83 8.50 6.86 7.27 7.30 7.71 7.39 7.52 9.26 9.50 7.64 7.96 9.71 10.22 9.93 10.21 June July Aug. 6.92 6.56 6.17 6.21 5.83 5.52 6.27 5.86 5.55 6.32 5.90 5.60 6.73 6.37 5.92 6.79 6.42 6.02 6.18 6.02 5.77p 8.50 8.16 7.90 7.41 6.86 6.49 7.80 7.30 7.17 7.57 7.27 7.33 9.65 9.57 9.51 8.30 7.95 7.59 10.45 10.16 9.75 10.68 10.49 10.15 6.38 6.36 6.15 6.10 6.46 6.43 6.24 6.15 6.52 6.49 6.26 6.19 6.78 6.84 6.72 6.66 6.70 6.84 6.80 6.75 6.15 6.17 6.19 6.17 8.50 8.50 8.50 8.50 7.70 7.65 7.33 7.22 8.19 25 6.95 6.89 6.87 6.86 8.09 7.71 7.55 7.81 7.76 7.50 7.43 9.70 9.66 9.70 9.55 8.36 8.51 8.27 8.05 10.67 10.32 10.47 10.32 10.74 10.76 10.61 10.62 2 9 16 23 30 7.02 6.87 6.51 6.42 6.32 6.01 5.90 5.78 5.74 5.84 5.99 5.89 5.83 5.81 6.05 5.94 5.84 5.84 5.96 6.55 6.45 6.36 6.31 6.31 6.72 6.67 6.41 6.30 6.27 6.19 6.15 6.09 5.99 5.89 6.W0 8.50 8.07 8.00 8.00 7.03 6.96 6.79 6.75 6.92 7.38 7.34 7.24 7.19 7.41 7.26 7.18 7.16 7.24 7.48 9.49 9.54 9.51 9.67 9.69 7.90 7.91 7.91 8.08 7.96 10.27 10.17 10.07 10.22 10.07 10.61 10.59 10.43 10.40 10.40 6 13 20 27 6.36 6.31 6.38 5.87 5.74 5.65 5.56 5.32 5.78 5.81 5.73 5.61 5.41 6.23 6.12 5.94 5.64 6.27 6.21 6.12 5.68 5.86 5.82 5.67 8.00 8.00 8.00 7.86 6.79 6.64 6.44 6.27 7.37 7.28 7.09 7.02 7.50 7.39 7.24 7.24 9.58 9.49 9.45 9.32 7.97 7.64 7.43 7.32 10.00 9.87 9.62 9.52 10.40 10.23 10.04 9.93 3 10 17 5.83 5.82 5.88 5.22 5.20 5.16 5.23 5.31 5.41 5.46 5.47 5.63 5.73 5.60 5.66 5.77 5.53 5.38 5.34 7.50 7.50 7.50 6.24 6.51 6.69 7.06 7.31 7.54 7.28 7.52 7.69 9.43 9.59 9.72 7.37 7.63 7.57 9.77 10.02 10.07 9.90 9.96 10.07 5.86 5.84 5.83p 5.17 5.23 5.25 5.38 5.48 5.53 5.53 5.72 5.74 5.81 5.76 5.77 5.79 7.50 7.50 7.50 6.74 6.75 6.81p 7.63 7.62 7.74 7.74 7.83p Jun. 4 11 18 July Aug. Sep. Daily--Sep. 12 18 19 5.89 5.68 5.56 5.38 5.31 5.36 5.42 5.44 5.76 NOTE: Weekly data for columns I 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, following the end ol the statement week. Column 13 is the Bond Buyer revenue index. Column 14 Is the FNMA purchase yield, plus loan servicing fee, on 30-day mandatory delivery commitments on the Friday following the end of the statement week. Column 15 I1 the average contract rate on new commitments for fixed-rate mort- 7.67p 11.14 gages (FRMs) with 80 percent toanto-value ratios at a sample of savings and loans. Column 16 sa the average initial contract rate on new commitments for one-year, adlustable-rate mortgages (ARMs) at SLs offering both FRMs and ARMs with the same number of discount points. FR 137 (12185) Strictly Confidential (FR)-Class II FOMC Money and Credit Aggregate Measures Seasonally adjusted trlod M1 Money stock measures and liquid assets Bank credit nontransactlons total loans M2 components in 1 2 SEPT. _M2 3 M3 L In M3 only 4 5s PERCINT ANNUAL GEBONT: ANNUALLY (Ut TO QIV) 1903 1984 1985 10.4 5.4 11.9 12.2 8.0 8.7 12.8 8.8 7. 7 1.0 21.2 3.8 9.9 10.5 7.7 QUARBtRLY AYSSAGS 30D QTR. 1985 4T8 UTB. 1985 IS? UTB. 1986 1986 2D 0QT. 14.5 10.7 7.7 15.8 9.6 6.1 4.3 10.5 8.0 4.7 J.3 8.7 -0.2 8.5 20.7 3.4 7.6 6.6 7.6 9.0 17.3 13.3 5.3 13.5 12.6 9.3 6.8 4.3 5.9 7.3 6.9 4.8 3.9 4.2 5.3 -2.3 11.9 11.2 5.7 9. 1 7.1 7.8 5.7 5.9 7.5 9.2 9.1 7.0 12.0 12.3 14.5 23.4 14.8 16.7 20.8 1.6 3.6 6.8 13.8 12.6 9.4 12.9 10.8 1.7 2.5 4. 5 13.6 8. 8 6.4 7.8 11.5 7.9 8.6 13.0 7.0 5.8 4.2 7.3 10.2 7.1 11.1 646.1 658.7 666.0 676.1 687.8 2622.2 2649.7 2670.5 2699.1 2723.4 3293.9 3315.5 3339.2 3375. 4 3399.5 3916.7 3950.0 3974.4 4011.0 196S--AUG. SEPT. OCT. DEC. 1986-JA, PBB. 14.1 7.1 APB. MAr JUNE AUG. P MONTHLY LETZELS 1986-API. Iat JU 8 (SBILL!OU) S(DZLLXOISI JOLI AUG. P USUAL 1.3111. 1986-AUG. 4 11 S8PT. 11 8P 7.7 2003.7 2023. 0 I035.7 37.8 17.2 11.4 2.5 -10.5 5.2 13.6 -0.4 671.7 65. 8 668.7 676.3 676. 1 10.4 11.9 8.5 7.8 9.5 8.2 7.2 22, 1986 Domestic nonfinancial debt2 U.S. other 2 total-2 and government2 7 T 8 11.2 9.9 21.5 15.8 15.2 8.5 13.8 13.6 11.2 34.3 14.0 9.6 9.4 12.7 4.1 14.6 15.2 17.5 9.5 12.1 14.4 15.6 9.9 12.9 11.6 16.1 9.8 7.1 8.7 1J.J 13.3 35.6 9.1 21.5 28.9 13.0 13.3 13.2 13.6 21.6 133.2 12.1 12.3 16.1 23.3 5.4 2.0 5. 9 3.8 13.0 13.5 16.4 9.8 5.3 7.8 12.8 15.5 13.9 10.3 18.8 8.4 9.3 10.7 10.2 9.2 10.1 14.7 88.3 8.7 8.4 10.0 10.8 10.6 11.0 13.7 1 I__n tmnts 1947.9 1957. 5 195.0 007.4 1638.8 1656.3 1677. 7 1691.1 1 1711.7 to 5432. 2 5478.3 5520.2 5566.5 5634.9 7071.0 7134.7 7197.9 7263.7 7346.5 679.8 685.0 687.9 668.5 693.0 695.3 OF LOANS FHO CONTINENTAL ILLINOIS NATIONAL BANK TO THE FDIC ANNUAL BATES FO1 BANK CMDTOT ABE ADJUSTED FOr & TRiANSiFR BEGIHNANG SEPTEMBER 26, 1984. DRLKVED I AVERAGlIIG END-OF-HONTH LEVELS OF ADJACNI MlONTHS, AND HAVE BEEN ADJUSTED DEBT 1AIA ABE ON A MONTHLI AVERAGE bASIS To EHIIUVDISCONTINUITIS. P-PBELIHINAh Components of Money Stock and Related Measures Billions of dollars, seasonally adjusted unless otherwise noted SEPT. Other Period Currency Overnight Demand checkable RPs and MMDAs depots deposits Epoiturodollars NSA NSA 1 S 2 117.2 157.0 169.7 243.4 247.1 268.4 130.2 166.9 167.7 3 4 Savings deposits 22, 1986 Small Money market Large denomi- mutual funds, NSA denomi- Term Term nation g.jneral Institutime purpose, tions deposits' and broker/ only nation time deposits3 RPs NSA Eurodollars NSA Savings bonds dealer' 8 10 11 12 13 14 15 16 Short- term Commerreasury clal paper securities Bankers acceptances 5 6 7 376.2 405.1 508.5 491.0 309.7 176.3 53.6 56.1 67.3 J03.2 775.0 881.8 877.3 138.2 161.7 176.8 43.2 57.7 64.1 325.2 409.8 433.0 48.0 65.6 63.0 89.3 81.8 77.8 70.9 74.0 79.0 211.1 268.2 295.8 127.5 158.7 199.5 44.0 44.5 42.7 263.1 266.4 169.0 171.5 63.8 64.5 495.2 499.8 299.7 300.3 880.9 878.3 176.8 176.7 63.6 62.3 421.0 425.6 57.3 58.6 78. 78.9 77.2 78.Q 277.3 280.6 182.9 187.2 43.6 43.2 168.7 169.8 170.6 266.0 267.8 271.5 173.7 176.7 178.6 65.2 66.4 70.3 I04.1 509.5 512.0 302.3 303.7 303.6 875.7 876.0 880.3 177.0 176.8 176.5 63.3 64.5 64.6 429.7 432.9 436.5 59.8 63.3 66.0 78.2 78.4 76.7 78.5 79.0 79.5 260.9 299.5 307.1 192.5 196.4 209.5 43.9 43.1 41.1 171.9 172.9 173.9 268.9 269.2 273.2 180.5 183.1 185.2 68.9 68.5 67.6 515.7 516.3 520.5 304.0 304.9 306.9 885.9 891.0 894.7 177.7 181.0 186.2 67.3 67.7 70.2 447.9 451.2 450.5 68.8 70.6 71.6 76.1 79.4 82.9 79.9 80.5 81.1 304.1 305.8 298.0 210.6 209.2 209.5 43.5 42.1 41.6 APt. iAY JU8N 174.4 175.8 176.7 275.7 281.6 284.9 189.9 195.1 199.0 68.5 69.1 66.3 525.2 530.8 540.4 311.4 318.5 325.0 895.9 891.2 885.7 191.4 193.2 197.2 74.1 76.1 75.0 452.1 446.3 445.1 71.5 74.2 75.5 81.6 79.9 80.5 81.8 82.6 83.4 297.1 305.1 300.9 203.0 206.7 210.7 41.0 40.1 40.3 JULI AUG. P 177.5 179.0 288.3 291.8 203.9 210.5 71.8 74.1 546.2 553.2 331.1 337.2 883.8 877.1 199.4 200.2 77.5 80.8 445.4 447.1 74.9 75.5 79.5 79.5 84.3 297.2 213.8 40.3 9 AIIOULLI (4TH QTR): 1983 1984 1985 t14.2 80oRTLr 1985-AUG. SEPt. OCT. NOV. DEC. 1986-JAR. 1PB. RAN. 1/ INCLUDES RETAIL BBPURCBASE AGREBN88TS. FROa 2/ 3/ ALL IRA AND KEOGH ACCOUNTS AT COBIRBCIAL BANKS AND THIFT SBALL TIEB DEPOSITS. EXCL8DoS IRA AND KEOGH ACCOUNTS. MET OF LARGE DIENOHIATION TIME DEPOSITS HELD P-PRBLIMIlARY M8 lONEI HARKET MOTUAL FUNDS AND THRIFT IMSITUTIONS. lISTITUTIONS Ala SUBUACTED STRICTLY CONFIDENTIAL (FR) CLASS II-FOMC Net Changes in System Holdings of Securities Millions of dollars, not seasonally adjusted September 19, 1986 Trea bills Treasury t c h a n bills e Period g ' n 50 5-10 -y1-5 1980 1981 1982 1983 1984 1985 Federal agencies net purchases' -0 Treasury coupons net purchases' wit5 1 or 1 over 10 t total 1-year 1-5 5-10 Net change outright holdings over 10 Net RPs' total total' 668 2,035 8,491 8,312 16,342 6,964 18,619 2,462 684 1,461 -5,445 1,450 3,001 -735 8,409 3,962 6,983 462 -350 -3,446 6,336 i-yeI 217 133 24 -3,052 5,337 5,698 13,068 3,779 14,596 912 294 312 484 826 1,349 2,138 1,702 1,794 1,896 1,938 2,185 4,564 2,768 2,803 3,653 3,440 4,185 I II III IV -2,044 7,183 4,027 5,431 961 245 465 846 6 868 1,326 1,295 12 1,552 I II -2,821 7,585 -2,861 7,535 -3,580 -356 1986--Jan. Feb. Mar. 61 -3,277 396 61 -3,318 396 -3,466 198 -312 Apr. May June 2,988 3,196 1,402 2,988 3,146 1,402 3,659 -4,470 455 July Aug. 867 2,940 867 2,850 -1,270 -448 2 9 16 23 30 380 380 208 128 531 208 128 531 545 1,630 5,527 -6,570 -169 6 13 20 27 168 126 349 67 168 36 349 67 -341 425 -633 1,310 Sept. 3 10 17 2,287 119 281 2,287 119 281 -1,085 2,179 -2,438 LEVEL--Sept. 17 ($ billions) 94.5 198.9 -4.0 1985--QTR. 1986--QTR. July Aug. 143 36.7 15.6 22.8 92.4 2.6 -494 3.9 1.2 .4 8.0 --- 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. 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 (1986, September 22). Bluebook. Bluebooks, Federal Reserve. https://whenthefedspeaks.com/doc/bluebook_19860923

@misc{wtfs_bluebook_19860923,
  author = {Federal Reserve},
  title = {Bluebook},
  year = {1986},
  month = {Sep},
  howpublished = {Bluebooks, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/bluebook_19860923},
  note = {Retrieved via When the Fed Speaks corpus}
}