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. 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) CLASS I - FOMC May 11, 1990 MONETARY POLICY ALTERNATIVES Recent Developments (1) Open market operations since the last Committee meeting have continued to be directed toward maintaining unchanged pressures on reserve positions, and the federal funds rate has remained in the area of 8-1/4 percent. Federal funds have tended to the soft side of this level since late April, however, reflecting a more abundant supply of nonborrowed reserves than expected, as shortfalls in tax receipts have shown through to the Treasury's account at the Federal Reserve. Adjustment borrowing has been around $100 million throughout the intermeeting period. Total adjustment plus seasonal borrowing, which has trended up over the period with the normal rise in seasonal borrowing, reached $257 million in the most recently completed maintenance period. In the current period, ad- justment plus seasonal borrowing is averaging $291 million. In recogni- tion of rising seasonal credit needs, the borrowing allowance was raised from $150 million immediately after the March meeting to $200 million in late April and then to the current level of $300 million. (2) Responding to shifting sentiment on the strength of the economy, inflation prospects, and the likelihood of a near-term tightening of monetary policy, other market interest rates first rose in the intermeeting period and then fell sharply. On balance, bond yields have risen 15 to 25 basis points, while short-term rates are down a like amount. The largest decreases were registered by Treasury bills; despite this -2- widening, quality spreads remain low by historical standards. The struc- ture of short-term rates had suggested strong expectations of a near-term firming of monetary policy part way through the period, but these expectations dissipated after release of the April data on employment, retail sales, and producer prices, and market yields now embody expectations of an essentially unchanged policy in coming months. (3) The dollar's weighted average exchange value has declined about 3-1/2 percent since the last FOMC meeting, with much of the drop occurring as interest rates in the United States began retracing earlier increases following the release of April employment data. The dollar was weak against the mark, which strengthened against most currencies following publication of the plan for German monetary unification and prompt conclusion of an important labor negotiation, both of which appeared to relieve some concerns about the outlook for inflation. Very late in the period the dollar dropped sharply against the yen as well. Foreign inter- est rates showed mixed movements over the intermeeting period. Both short- and long-term rates in EMS countries other than Germany moved lower, prompted in some cases by cuts in central bank lending rates as those countries reacted to the earlier weakness of the mark in the EMS. The Japanese stock market rebounded substantially from its low in early April. The Desk sold $100 million against yen prior to and immediately following the April G-7 meeting, with half for the System account. -3- (4) M2 growth slowed to a 2 percent rate in April, well below the 6 percent path set for the March-to-June period at the last FOMC meeting. Part of this weakness owed to declines in the wholesale components of M2: overnight RPs ran off, likely associated with a contraction in government securities held in commercial banks' trading accounts last month, and demand deposits declined at a 6-1/2 percent rate. Growth of the retail components of M2 also slowed, dropping to a 3-1/2 percent rate from around 6 percent over the first quarter. M2 has been restrained by the rise in intermediate- and long-term rates since late last year, and by the unusually slow adjustment of rates on retail deposits. 2 The conser- vative pricing stance at thrifts, which has accompanied a shrinkage of the industry and supervisory constraints on brokered deposit rates, has tended to deflect deposit flows toward banks. Banks also have held down deposit rates, as retail deposit inflows at those lower rates have been more than sufficient to fund credit growth. With their attractiveness diminished, small time deposits continued to increase sluggishly in April while noncompetitive tenders at bill and note auctions surged. Slow credit expan- sion at banks in April, along with an apparently steeper contraction of the thrift industry, held down overall needs for funds at depository institutions, and M3 grew at only a 1-1/4 percent rate in April as large CDs continued to decline. 1. M1 slowed to a 3-1/2 percent rate last month, despite continued strong expansion in currency and other checkable deposits. Reflecting the continued strength in currency, the monetary base grew at a 7 percent pace in April, a bit below the rate of the first quarter. 2. From late last year to the end of April, the 1-year Treasury bill rate had risen about 3/4 percentage point; by contrast, over the same period, the rate on 1-year small time deposits had risen only about 12 basis points at banks and at thrifts had fallen slightly. -4- (5) The growth of private domestic nonfinancial debt has moderated somewhat in recent months; the slowing appears to reflect a dropoff in credit demands, though tightening supply conditions likely have affected some specific credit categories. Most of the deceleration in overall credit usage reflected reduced borrowing by the household sector. Consumer credit expanded sluggishly in the first quarter and consumer lending at commercial banks weakened in April. The growth of real estate loans at banks also slowed in April; the higher cost of residential mortgage credit and softening real estate markets may be restraining demands, but survey data suggest that banks are tightening the terms of lending on many types of nonresidential loans. Reluctance of banks and other lenders to provide merger-related financing has continued to discourage net equity retirements. Abstracting from estimated merger financing, business lend- ing at banks was weak in the first quarter, although it strengthened in April. Results from a May survey suggest that the weak C&I loan growth since the turn of the year primarily reflects reduced demand, particularly from large and middle market firms, but middle market firms and small businesses also faced tighter credit standards and more stringent loan terms. However, commercial paper issuance has been strong and businesses continue to find receptive markets for investment-grade bond issues, sustaining overall expansion of business credit. has been boosted by RTC-related borrowing. Federal debt issuance From the fourth quarter to March, total domestic nonfinancial debt increased at nearly a 7 percent pace. - 5- MONEY, CREDIT, AND RESERVE AGGREGATES (Seasonally adjusted annual rates of growth) QIV'89 to Feb. Mar. Apr. Apr. M1 10.0 5.1 3.4 4.9 M2 8.7 5.0 2.0 5.3 M3 4.6 1.2 2.4 Domestic nonfinancial debt 7.6 7.5 n.a. 6.81 Bank credit 8.4 9.2 4.1 5.6 -36 16.6 -1.6 2.6 Total reserves 6.4 1.6 -.6 2.0 Monetary base 9.2 8.7 7.0 8.4 913 173 224 989 861 882 Money and credit aggregates .8 Reserves measures Nonborrowed reserves2 (Millions of dollars) Memo: Adjustment plus seasonal borrowing Excess reserves n.a. - not available. 1. Through March. 2. Includes "other extended credit" from the Federal Reserve. NOTE: Monthly reserve measures, including excess reserves and borrowing, are calculated by prorating averages for two-week reserve maintenance periods that overlap months. - 6 - Policy Alternatives (6) Three alternatives--containing the standard differences in associated federal funds rates--are presented below for consideration by the Committee. Under alternative B, federal funds would be expected to continue to trade around 8-1/4 percent, with an initial level of adjustment plus seasonal borrowing of $350 million. The specifications of alternative A call for federal funds trading around 7-3/4 percent and a borrowing level of $300 million, while those of alternative C call for federal funds in the 8-3/4 percent area, which is likely to involve $400 million of borrowing. Judging from the experience of recent years, it is anticipated that seasonal borrowing will rise about $100 million over the intermeeting period; the borrowing levels suggested above incorporate a $50 million technical increase to take account of the expected rise in the next few weeks, but an additional increase in the borrowing path may be necessary under all three alternatives. (7) Interest rates generally would be expected to show little net change under alternative B. Market expectations now embody federal funds continuing to trade around 8-1/4 percent, as under this alternative. Similarly, incoming information on the economy consistent with the greenbook forecast would be roughly in line with the continued economic growth and moderation in measured inflation--though with little improvement in longer-term price trends--that market participants now seem to be anticipating. Rates on Treasury bills and notes, however, could be subject to transitory supply pressures if RTC activity accelerates appreciably and with it Treasury financing needs. A breakthrough in negotiations on the -7- budget between the Administration and the Congress in coming weeks would be likely to spark a rally in capital markets, which after a time might induce a downward adjustment in the foreign exchange value of the dollar. Absent such a breakthrough, the dollar likely would remain around recent levels on foreign exchange markets; with the dollar stable and German reunification impending, a tightening of monetary policy in Germany and Japan before the next FOMC meeting appears unlikely. (8) Projected growth rates for the monetary aggregates from March to June are given in the table below for all three alternatives. (The table and charts on the following pages show more detailed data.) Under alternative B, growth in both M2 and M3 would pick up over May and June from the sluggish pace of April. This pickup results in part from a cessation of the runoff of demand deposits and RPs. In addition, the response of depositors to previous increases in opportunity costs would begin to wane. Moreover, opportunity costs have already narrowed from April and, with market interest rates stable, this narrowing could continue, buoying retail deposit inflows, as banks raise small time deposit rates, albeit slowly, in adjustment to increases in market rates on balance this year. To an extent, the strengthening of M2 and M3 under this alternative rests on a rebound in bank credit growth and associated funding needs in May and June--given the evidence that reductions in willingness to lend are limited. Again, the behavior of the RTC constitutes a major uncertainty in the outlook for money growth. To date in the second quarter, RTC spending still has been fairly modest. We have assumed pro- gressively more resolution activity over May and June, but well below -8- RTC's announced goal of 141 resolutions involving $50 billion of assets for this quarter. A surge in RTC activity could damp M3 growth as thrift assets end up on the government's balance sheet. And it could affect M2 as well, if large volumes of retail deposits are transferred to commercial banks without accompanying loans and investments, reducing bank needs to raise deposit offering rates. On balance, M2 growth is projected to strengthen to a 5 percent pace on average in May and June, in line with average growth over the first four months of the year. M3 growth would remain quite sluggish as thrifts continued to shrink--through RTC resolutions and through action to meet capital requirements--but would pick up a little to about a 3-1/2 percent pace from growth of around 1 percent in March and April. Alt. A Alt. B Alt. C 4-1/2 3-1/4 4-3/4 4 3 4 3-1/2 2-3/4 3-1/4 5-1/2 3 5 5-1/4 2-3/4 4-3/4 5 2-3/4 4-1/2 6 to 10 6 to 10 7 to 11 Growth from March to June M2 M3 M1 Growth from Q4'89 to June M2 M3 M1 Associated federal funds rate ranges Alternative Levels and Growth Rates for Key Monetary Aggregates M2 M3 M1 --------------------------------------------------------- -----------------------Alt. C Alt. A Alt. B Alt. C Alt. A Alt. B Alt. B Alt. C Alt. A Levels in billions 1990 January February March 3229.3 3252.6 3266.2 3229.3 3252.6 3266.2 3229.3 3252.6 3266.2 4046.1 4061.7 4064.4 4046.1 4061.7 4064.4 4046.1 4061.7 4064.4 794.8 801.4 804.8 794.8 801.4 804.8 794.8 801.4 804.8 April May June 3271.7 3283.4 3303.0 3271.7 3282.6 3298.9 3271.7 3281.8 3294.8 4068.5 4076.6 4096.5 4068.5 4076.3 4093.9 4068.5 4076.0 4091.3 807.1 808.7 814.3 807.1 808.4 812.8 807.1 808.1 811.3 Monthly Growth Rates 1990 January February March 3.1 8.7 5.0 3.1 8.7 5.0 3.1 8.7 5.0 1.3 4.6 0.8 1.3 4.6 0.8 1.3 4.6 0.8 0.0 10.0 5.1 0.0 10.0 5.1 0.0 10.0 5.1 April May June 2.0 4.3 7.2 2.0 4.0 6.0 2.0 3.7 4.8 1.2 2.4 5.9 1.2 2.3 5.2 1.2 2.2 4.5 3.4 2.3 8.3 3.4 1.9 6.5 3.4 1.5 4.8 Quarterly Ave. Growth Rates 1989 Q2 1.6 Q3 6.9 Q4 7.0 1990 Q1 6.0 Q2 4.5 1.6 6.9 7.0 6.0 4.3 1.6 6.9 7.0 6.0 4.1 3.2 3.9 1.8 2.8 2.3 3.2 3.9 1.8 2.8 2.2 3.2 3.9 1.8 2.8 2.1 -4.4 1.8 5.1 4.8 4.8 -4.4 1.8 5.1 4.8 4.5 -4.4 1.8 5.1 4.8 4.2 Dec. 89 to Mar. 90 Mar. 90 to June 90 5.6 4.5 5.6 4.0 5.6 3.5 2.3 3.2 2.3 2.9 2.3 2.7 5.0 4.7 5.0 4.0 5.0 3.2 Q4 Q4 Q4 Q4 Q4 4.5 6.0 5.3 5.3 5.5 4.5 6.0 5.2 5.3 5.2 4.5 6.0 5.1 5.3 5.0 3.3 2.8 2.6 2.4 2.9 3.3 2.8 2.5 2.4 2.8 3.3 2.8 2.5 2.4 2.7 0.6 4.8 4.9 5.0 5.1 0.6 4.8 4.7 5.0 4.8 0.6 4.8 4.6 5.0 4.5 88 89 89 89 89 to to to to to Q4 89 Q1 90 Q2 90 Apr. 90 June 90 1990 Target Ranges: 3.0 to 7.0 2.5 to 6.5 o Chart 1 ACTUAL AND TARGETED M2 Billions of dollars Actual Level * Short-Run Alternatives 3450 3400 ,-3350 ,, 3300 3250 3200 3150 3100 O N 1989 D J F M A M J I J 1990 A S O N D Chart 2 ACTUAL AND TARGETED M3 Billions of dollars 4350 Actual Level SShort-Run Alternatives -- 1 4300 -- 4250 -- 4200 2.5%, , 4150 .1 5- S -I 4100 - 4050 - 4000 -1 3950 S S S S S S S S S 5 0 IO N D N 189 1989 D M A M J J A M Fl1990ll A M J J A F J 1990 S O N D 0 N D 3900 Chart 3 M1 Billons of dollars 10% Actual Level ------ Growth From Fourth Quarter I V I I -- 825 I- C A - ec S -- 800 ......... .................... S 55 55 - S, S-5% I I I I O N 1989 D I [ I I J IL I F M l _I I I I A M J I I I I J 1990 A I S [ I I I I O N D 775 750 Chart 4 DEBT Billions of dollars 10750 Actual Level * Projected Level -i 10500 -1 10250 -- 10000 -1 9750 I I I II I dI 0 N 1989 D J F M A M J 1990 I I I J A S O N 9500 D - 10 - (9) Even with the projected strengthening in money, growth of both M2 and M3 over the March-to-June period would be noticeably below expectations at the time of the last meeting. Moreover, growth of M2 would be appreciably below the 6 to 7 percent rate of expansion of the previous several quarters, leaving this aggregate only a little above the midpoint of its annual range at mid-year. As noted, the moderation in both M2 and M3 has resulted in part from the weakness in credit growth at banks as well as thrifts. To a considerable extent, this weakness seems to represent a rechannelling of credit flows involving assets, such as mortgages and consumer receivables, that are easily securitized and absorbed by other lenders, without materially raising costs to borrowers. The lack of serious disruptions from this process can be inferred from continued narrow yield spreads between mortgages and Treasury securities. In addition, weaker bank credit growth reflects some tightening of terms and reduction in availability of loans--including those to small business and for construction--that are not easily transferred to other lenders. In the staff forecast, however, the "credit crunch" does not deepen and, while important in certain locales and for selected uses, does not have a major effect on aggregate borrowing and spending. In these circumstances, the slower money growth now forecast for the second quarter would not signal the approach of underlying weakness in the economy, since it would be offset by an upward shift in velocity. M2 velocity in the staff fore- cast is projected to increase at a 2-1/4 percent rate in the second quarter, following a 1-1/2 percent rise in the first quarter. - 11 - (10) Consistent with the notion that credit remains generally available, growth in the debt of private domestic nonfinancial sectors is expected to continue close to the 6 percent average pace of recent months, about in line with spending. While the less hospitable attitude of lend- ers toward LBOs will continue to restrain corporate restructuring activity and associated credit usage, credit availability difficulties elsewhere in the business sector are expected to have only relatively modest effects, and borrowing by nonfinancial businesses should continue around its recent rate. Credit availability effects likely will continue to be more notice- able in the construction and development area, and the rise in mortgage rates that has occurred this year will continue to restrain household mortgage borrowing as well. Consumer credit growth is expected to remain subdued as spending on durables is-projected to be sluggish. Considerable uncertainty surrounds the outlook for Treasury borrowing--both the amount and timing--owing to RTC financing needs. While Treasury borrowing for RTC working capital purposes would end up boosting the debt aggregate, such borrowing would not be expected to put underlying pressure on the general level of interest rates: federal government liabilities simply would be replacing those of private intermediaries, which are not included in the debt aggregate, leaving unaffected the volume of saving available for investment. Assuming a substantial pickup in RTC-related borrowing in the second quarter, federal government debt would increase at about an 8 percent pace over the March-to-June period. Total domestic nonfinancial debt is projected to expand at a 7 percent rate over the three months and - 12 - by June would be 7 percent at an annual rate above its fourth-quarter 1989 base, at the midpoint of its 1990 monitoring range. (11) The easing of reserve conditions under alternative A would tend to strengthen money growth over May and June to something more in line with rates incorporated in the Committee's expectations at the last meeting. Opportunity costs would narrow even more, boosting M2 growth to nearly a 6 percent rate over May and June, leaving this aggregate noticeably above the midpoint of its annual range. M3 growth would firm to a 4 percent annual rate, keeping this aggregate a little above the lower bound of its range. The easing of policy under alternative A would come as something of a surprise to most market participants, and money market rates would decline by the full 50 basis point drop in the federal funds rate. The dollar would come under downward pressure, and, absent incoming information pointing to a weaker economy or a distinct improvement in underlying cost or price trends, the decline in bond rates would be limited, resulting in a steeper yield curve. If, however, evidence sug- gested a softening in economic activity, perhaps reflecting more powerful credit restraint than now seems apparent, the drop in short-term rates would feed through to bond yields. The decline in market rates would tend to buoy borrowing and spending by those with market access, helping to offset the effects of tighter credit availability on spenders dependent on depository intermediaries. (12) The tighter reserve conditions under alternative C would be expected to keep money growth damped. M2 would be at the middle of its range by June and M3 just above the lower end of its range. Short-term - 13 - rates would increase by about the 1/2 percentage point rise in the federal funds rate, and the dollar would tend to firm. Banks would raise the prime rate, and could further tighten other credit terms. Bond yields also would rise, at least initially, in response to the reversal of the previous trend in Federal Reserve actions. However, in the context of only moderate growth in the economy, the higher short-term interest rates and slower money growth would be seen as a policy response to inflation pressures, implying additional emphasis by the Federal Reserve on its price stability objective. In this context, the credibility of that objective could be enhanced, to the benefit of bond prices. - 14 - Directive Language (14) Draft language for the operational paragraph, including the usual options, is shown below. OPERATIONAL PARAGRAPH In the implementation of policy for the immediate future, the Committee seeks to DECREASE SOMEWHAT/maintain/ INCREASE SOMEWHAT the existing degree of pressure on reserve positions. Taking account of progress toward price stabil- ity, the strength of the business expansion, the behavior of the monetary aggregates, and developments in foreign exchange and domestic financial markets, slightly (SOMEWHAT) greater reserve restraint (WOULD/MIGHT) or slightly (SOMEWHAT) lesser reserve restraint would (MIGHT) be acceptable in the intermeeting period. The contemplated reserve condi- tions are expected to be consistent with growth of M2 and M3 over the period from March through June at annual rates of about ____AND ____ [DEL: 6 and 4] percent respectively. The Chairman may call for Committee consultation if it 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 outside a 6 to 10] percent. range of ____TO ____[DEL: May 14, 1990 SELECTED INTEREST RATES (percent) 89-- High Low 10.23 8.24 9.19 7.87 11.50 10.50 9.77 7.60 9.48 7.78 9.26 7.85 10.47 9.26 7.95 7.19 11.73 9.92 11.22 9.68 9.41 8.34 90-- High Low 8.58 8.11 8.06 7.62 10.50 10.00 9.09 7.90 9.07 7.94 9.03 8.00 10.32 9.55 7.79 7.35 10.99 10.13 1067 9.80 8.63 8.35 11.50 11.07 10.98 10.50 10.50 10.50 10.50 10.50 8.98 8.37 7.83 8.13 8.25 8.02 7.80 7.77 8.86 8.28 8.02 8.11 8.19 8.01 7.87 7.84 8.83 8.27 8.08 8.12 8.15 8.00 7.90 7.90 10.09 9.65 9.54 9.55 9.55 9.39 9.28 9.36 7.51 7.35 7.28 7.36 7.52 7.48 7.39 7.31 10.90 10.39 10.11 10.38 10.44 10.19 10.06 10.06 10.77 10.20 9.88 9.99 10.13 9.95 9.77 9.74 9.30 9.03 8.74 8.65 8.71 8.62 8.51 8.39 8.13 8.39 8.63 8.78 8.21 8.47 8.59 8.79 8.26 8.50 8.56 8.76 9.63 9:84 9.92 10.09 7.43 7.52 7.53 7.62 10.30 10.49 10.61 10.75 9.90 10.20 10.27 10.37 8.39 8.46 8.53 8.55 Monthly May 89 Aug Sep Oct Nov Dec 89 89 89 89 89 9.13 8.96 8.72 832 8.25 8.21 8.00 7.90 Jan Feb Mar Apr 90 90 90 90 7.74 7.64 7.65 7.69 10.11 10.00 10.00 10.00 Weekly Feb 7 90 Feb 14 90 Feb 21 90 Feb 28 90 7.65 7.65 7.64 7.64 10.00 10.00 10.00 10.00 9.75 9.84 9.94 9.91 7.50 7.49 7.55 10.36 10.50 10.60 10.21 10.10 10.31 7.50 10.55 10.23 Mar 7 90 Mar 14 90 Mar 21 90 Mar 28 90 7.62 7.64 7.66 7.68 10.00 10.00 10.00 10.00 10.00 9.92 9.82 9.98 7.50 7.55 7.54 7.57 10.67 10.63 10.55 10.64 10.29 10.34 10.26 10.22 Apr 4 90 Apr 11 90 Apr 18 90 Apr 25 90 7.67 7.69 7.69 7.69 10.00 10.00 10.00 10.00 9.93 9.96 10.25 10.32 7.54 7.53 7.64 7.77 10.55 10.67 10.78 10.99 10.26 10.25 10.41 10.56 May May 7.66 7.66 10.00 10.00 10.16 10.12 7.79 7.66 10.80 10.63 10.67 10.54 Jun 89 Jul 89 2 90 9 90 Daily May 4 90 May 10 90 May 11 90 8.21 7.76 8.23 8.23p 7.71 7.62 7.82 7.72 7.63 782 7.73 7.63 8.45 8.35 8.26 8.30 8.26 8.21 10.00 10.00 10.00 8.77 8.73 8.56 p 8.84 8.82 8.63p 8.83 8.81 8.61p NOTE: Wekly daa for columnm1 thrugh 11 aW stlnmel wMee averages Daa n oolumn 7 e taken from Donoghue's Money Fund Repor Col 12 13 ad 14 e 1-dayquolefr rday Thurday or Fday respecvely, folwing the end of theIstaten r Caolmn 13 l the Bond Buy avenue ilx Column 14 ith FNM pulhmylk plus loan seMng fle on 30-day mu ory dellvery comlmen Colu 151s e average conact rate on new comnlm for fxed-rae mortgags(FRMs) with 80 pecent lo-to-value ratos at mnor stauton lende Column 18 Is the average s 1ni cotract ru n new commvbnnisfOr1-y adstab-rae r nMngageARM ajor ins oWtfeng both FRMs and ARMs ht the un numbne of discoun points. p -- pramnwy daa Strictly Confidential (FR) Class II FOMC Money and Credit Aggregate Measures Seasonally adjusted MAY Money stock measures and liquid assets L 4 5 a 7 8 3.6 5.5 5.9 12.0 10.6 -1.5 5.8 6.3 3.3 5.5 7.1 4.4 7.9 7.8 7.2 9.0 8.0 7.4 10.2 9.4 8.1 9.9 9.1 8.0 1.6 6.9 7.0 6.0 3.7 8.7 7.7 6.4 9.1 -6.9 -17.1 -9,6 3.2 3.9 1.8 2.8 5.0 4.2 2.8 2.9 6.7 7.0 7.7 5.0 6.9 4.6 9.5 7.8 7.9 7.9 7.4 6.1 7.7 7.2 7.9 6.5 -5.2 -9.1 -3.9 8.4 2.0 3.8 8.0 2.0 8.2 1.0 -1.6 6.3 9.8 7.6 6.3 6.9 7.2 7.6 3.1 0.9 9.8 10.3 9.5 7.0 6.6 9.0 7.4 8.4 6.3 4.1 -4.2 -20.3 -23.0 -19.8 -9.6 -10.7 2.6 0.2 5.8 6.7 1.4 0.0 1.3 3.7 3.8 6.4 -0.1 5.6 6.3 3.4 1.3 2.1 3.8 5.4 4.3 6.6 6.3 7.9 7.1 5.5 11.4 7.4 1.8 5.6 4.2 4.3 -0.1 9.1 10.9 9.5 10.9 3.7 7.9 8.8 7.7 8.3 8.0 6.1 8.0 8.2 5.2 7.4 7.7 6.9 6.4 8.3 7.2 8.4 8.9 4.8 0.0 10.0 5.1 3.4 3.1 8.7 5.0 2.0 4.2 8.2 5.0 1.6 -5.7 -11.0 -16.5 -1.8 1.3 4.6 0.8 1.2 0.6 2.2 5.0 2.7 8.4 9.2 4.1 5.3 10.5 14.8 7.3 5.7 6.8 5.2 6.3 5.6 7.6 7.5 6.6 794.8 3221.0 2426.2 820.6 4041.6 4868.3 2582.6 2265.4 7497.5 9762.9 794.8 801.4 804.8 807.1 3229.3 3252.6 3266.2 3271.7 2434.6 2451.2 2461.4 2464.6 816.7 809.2 798.1 796.9 4046,1 4061.7 4064.4 4068.5 4870.6 4879.5 4899.9 2585.8 2603.8 2623.8 2632.8 2275.4 2295.4 2323.8 2338.0 7533.0 7575.5 7608.6 7648.8 9808.5 9871.0 9932.5 9986.8 808.2 806.3 810.6 805.7 805.4 3266.8 3272.4 3273.2 3273.7 3268.7 2458.6 2466.1 2462.5 2468.0 2463.3 792.5 798.5 804.3 794.7 791.3 4059.3 4070.9 4077.5 4068.4 4060.0 1 2 3 6.3 4.3 0.6 4.3 5.2 4.5 QUARTERLY AVERAGE 1989-2nd QTR. 1989-3rd QTR. 1989-4th QTR. 1990-1st QTR. -4.4 1.8 5.1 4.8 MONTHLY 1989-APR. MAY JUNE JULY AUG. SEP. OCT. NOV, DEC. 1990-JAN. FEB. MAR. APR. p LEVELS (SBILLIONS) MONTHLY 1989-DEC. 1990-JAN. FEB. MAR. APR. p WEEKLY 1990-APR. 2 9 16 23 p 30 p Domestic nontinancilI debt- M3 M2 ANN. GROWTH RATES (%) : ANNUALLY 14 TO Q4) 1987 1988 1989 a_ nk credit 1990 total loans and ivstments MI Period 1. nontransactions components in M3 only n M2 15, U.s government' other' total' 9 10 : Debt data are on a monthly average basis, derived by averaging end-of-month levels of adjacent months, discontinuities. p-preliminary pe-preliminary estimate and have been adjusted to remove Strictly Confidential (FR) II FOMC Class Components of Money Stock and Related Measures MAY seasonally adjusted unless otherwise noted -T"- Period Currency Demand deposits Other Overnight checkable deposits RPi and Eurodollars NSA' ____ S___2 ~5 $(BILLIONS): LEVELS ANNUALLY (4TH QTR.) 1987 1988 1989 - _4 _i 1_ Sawings deposits __ __ _ Money market Large mutual funds denoml- nation time deposits' _ " _7 general Institu. tions purpose only and brokeri « ldealer' 9 nation time deposits* ____ 10 Short- Term RP NSA' Term Eurodollars NSA' __ Savings bonds 11 12 43 14 term Treasury securities _____ Bankers Commer. cll paper' acceptances Is i- 195.0 210.7 220.8 291.5 287.6 279.5 260.5 280.4 283.1 87.6 83.3 75.6 529.3 504.9 479.9 416.2 428.2 407.7 903.6 1021.6 1138.9 220.5 237.5 308.0 87.2 86.7 101.5 482.3 538.0 560.7 107.4 123.2 103.4 92.4 102.7 80.1 99.8 108.8 116.8 261.9 267.0 312.7 258.4 44.5 326.2 I40.7 349.7 40.6 MONTHLY 1989-APR. MAY JUNE 215.7 216.6 217.2 281.3 279.6 276.3 277.9 272.8 273.0 78.5 77.8 79.6 473.2 463.1 460.9 412.0 405.4 403.4 1084.1 1103.0 1114.0 257.8 261.2 268.3 88.3 92.1 96.3 568.3 573.1 574.9 126.3 127.5 128.4 100.3 97.2 93.4 112.2 112.8 113.6 280.0 288.1 289.6 358.2 348.8 349.4 41.5 41.2 41.2 JULY AUG. SEP. 217.8 218.6 219.3 279.6 278.5 278.1 274.5 276.0 278.4 81.0 78.3 74.9 463.9 468.2 471.9 403.3 404.0 405.5 1122.4 1130.0 1132.6 277.7 287.8 295.9 99.0 101.4 101.6 574.7 570.5 565.6 123.8 116.9 112.9 91.8 89.6 85.3 114.3 115.0 115.7 290.9 293.3 303.7 349.5 354.3 350.3 41.9 42.6 41.0 OCT. NOV. DEC. 220.0 220.4 221.9 280.0 278.8 279.7 280.8 282.8 285.7 75.3 74.8 76.8 475.3 480.8 483.7 406.1 407.9 409.0 1135.9 1138.5 1142.3 302.7 309.0 312.4 101.1 101.1 102.3 562.7 561.0 558.3 108.3 107.2 94.8 80.0 79.2 81.1 116.2 116.8 117.5 308.8 309.3 320.0 350.0 351.3 347.9 40.0 40.5 41.2 224.6 226.6 228.4 277.3 280.2 279.3 285.4 287.0 289.5 80.8 81.5 80.7 484.9 489.4 494.9 410.3 413.6 414.6 1142.5 1141.2 1143.8 318.1 324.5 325.0 103.2 103.7 105.4 554.1 549.4 544.0 91.4 94.8 92.9 75.9 71.8 69.7 117.7 118.2 119.1 322.8 316.6 337.2 343.3 344.7 342.9 40.7 38.3 36.4 230.1 277.8 291.6 78.6 498.7 415.7 1144.0 324.8 106.8 538.9 92.5 69.8 1990-JAN. FEB. MAR, APR. 1. 2. 3. 4. , MfMDA Small denomi- 15, 1990 p Net of money market mutual fund holdings of these items. Includes retail repurchase agreements. All IRA and'Keogh accounts at commercial banks and thrift institutions are subtracted from small time deposits. Excludes IRA and Keogh accounts. Net of large denomination time deposits held by money market mutual funds and thrift institutions. p-preliminary STRICTLY CONFIDENTIAL (FR) CLASS II-FOMC May 14, SYSTEM HOLDINGS OF SECURITIES 1 IN NETCHANGES Millions of dollars, not seasonally adjusted 1990 Treasury bills Period Net purchae Net change Rdeptions (-) 7,700 3,500 1,000 9,029 2,200 12,730 e within 1-year 893 236 358 236 441 293 158 9,779 2,441 1,858 4,686 1,404 946 258 1,398 284 1,092 -800 3,661 -175 1,017 966 1,084 1,824 562 432 -20 287 -9 284 155 -228 1,361 -163 -24 100 100 3,779 826 1,938 1,349 190 3,358 2,177 327 2,185 11,479 18,096 1986 20,099 1987 1988 12,933 1989 1,466 1988--Q1 Q2 2,200 Q3 Q4 319 423 1,795 5,098 1989--01 02 -3,842 2,496 -6,450 -6,042 96 -9,650 172 03 Q4 9,263 2,200 2,400 3,200 4,930 4,333 1990--01 -3,799 1,400 -5,199 1989--June July August September October November December 1990--January February March April Mar. -1,881 423 1,795 5,098 -571 1,200 -1,771 -5,516 -934 2,400 800 -7,916 -1,734 -1,414 8,794 1,883 -1,065 1,400 -2,814 5,264 1,883 -2,065 -3,677 543 5,796 -3,277 543 5,796 7 14 5,435 -11,264 3,530 1,000 400 0 0 488 488 Redemptions (-) over 10 5-10 1-5 14,596 19,099 3,905 1984 1985 7,635 Treasury coupons 3 Net pu chases Net change Federal agencies redemptions (-) 6,964 4,185 18,619 20,178 20,994 1,450 3,001 10,033 -11,033 14,513 -10,391 -1,683 1,315 -975 6,737 3,903 -248 -- -3,514 5,220 1,393 -5,591 924 -893 -1,541 - 2,104 -172 500 -369 -6,477 2,075 -9,921 3,934 200 -4,999 -4,061 -1,771 -7,983 -1,884 54 -3,368 10,002 155 5,419 1,883 -2,065 -3,677 100 742 5,818 100 688 3,877 -5,152 617 3,641 463 -453 3,867 -8,435 4,417 -43 -1,260 4,201 -5,353 3,112 -1,253 4 11 May 1,557 -3,011 7,030 1,717 8,776 21 28 Apr. Net RPs 3,440 1,476 17,366 9,665 - Net change outright holdins total 2 200 4,833 290 181 ---- 200 4,833 290 181 200 -29 4,933 290 -2,362 103 7,661 -7,458 347 -- 347 347 -84 9 Memo: -97 6 LEVEL (bil.$) May 9 - 107.2 1. Change from end-of-period to end-of-period. 2. Outright transactions in market and with foreign accounts. 3. Outright transactions in market and with foreign accounts, and short-term notes acquired in exchange for maturing bills. Excludes maturity shifts and rollovers of maturing coupon issues. 58.1 12.6 - - --- 26.3 - - 236.2 -122.5 ; - -- - 4. Ketiects net change and redemptions (-) of Treasury and agency securities. 5. Includes change in RPs (+), matched sale-purchase transactions (-), and matched purchase sale transactions (+). 6. The levels of agency issues were as follows: within | 0 | 1-year 2.3 1-5 1 2.9 5-10 1 1.1 over 10 0.2 total 6.5 

Federal Reserve (1990, May 14). Bluebook. Bluebooks, Federal Reserve. https://whenthefedspeaks.com/doc/bluebook_19900515

@misc{wtfs_bluebook_19900515,
  author = {Federal Reserve},
  title = {Bluebook},
  year = {1990},
  month = {May},
  howpublished = {Bluebooks, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/bluebook_19900515},
  note = {Retrieved via When the Fed Speaks corpus}
}