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 CLASS I - FOMC (FR) March 22, 1991 MONETARY POLICY ALTERNATIVES Recent Developments (1) In the period immediately after the February FOMC meeting, the Desk sought a degree of reserve pressure consistent with federal funds continuing to trade in the area of 6-1/4 percent. Reserve targets were based on a formal allowance for adjustment plus seasonal borrowing of $100 million. On March 8, in response to data indicating that the economy had continued to weaken substantially into February, the borrowing allowance was lowered by $25 million and the Desk signalled a 25 basis point reduction in the System's intended federal funds rate. The average federal funds rate has dropped to 6.11 since the easing, down from 6.33 percent over the first two maintenance periods after the meeting. Adjustment plus seasonal borrowing has run appreciably above the path allowance, in part reflecting a greater willingness by banks to come to the discount window when conditions tighten in the funds market.1 (2) The change in borrowing behavior may have been one reason for a substantial decrease in the volatility of the federal funds rate over the intermeeting period. The intraday trading range, for example, has narrowed to levels prevailing last autumn, before the cut in reserve requirements. An additional factor damping funds rate movements may have been the greater experience of bank reserve managers in operating with 1. Borrowing averaged $264 million in the first two maintenance periods, and $138 million in the most recent complete maintenance period. In the current period, the Desk made a technical upward adjustment of $50 million to the borrowing assumption in recognition of the usual upturn in seasonal borrowing and the greater use of adjustment credit. lower balances. The most important factor, however, probably has been the rise of required reserve balances from their seasonal low reached in early February, so that, together with enlarged required clearing balances, they now appear to exceed the level needed for daily clearing purposes. With required balances moving above clearing needs, demands for excess reserves fell over the intermeeting period, averaging a more normal $1.1 billion in the last two maintenance periods. (3) Despite the drop in the federal funds rate, short-term Treasury bill rates declined only very slightly over the intermeeting period and rates on longer-term Treasury issues rose about 35 basis points. 2 The upward pressures on rates likely stemmed primarily from improved prospects for economic recovery following the quick and successful conclusion of the war--with the resulting rebound in consumer confidence and demands for reconstruction capital by Kuwait. Signs of increased activity in housing markets also appeared to foreshadow an economic turnaround, which--along with disappointing news on prices--was seen as limiting any scope for further easing by the Federal Reserve. Antici- pation of better business earnings and reduced strains on borrowers have helped narrow spreads of private securities over Treasury debt during the intermeeting period, particularly for those issuers that had been seen as especially vulnerable to a prolonged recession. Rates on most private short-term paper have declined a little more than Treasury bill rates while, in contrast to yields on Treasury bonds, rates on high-grade bonds 2. Discussions of interest and exchange rates and stock prices in this document are based on the most recent information available through noon, March 22. are little changed and those on lower-rated bonds are down substantially. Stock prices flirted with record levels during the period, though they have retraced part of these gains in recent days. Bank stock prices were about unchanged over the period, but spreads on subordinated bank debt have narrowed substantially--drawing forth some issuance--and the access of lower-rated banks to the federal funds market has become a bit less restricted. (4) The dollar's weighted-average foreign exchange value soared 11 percent over the intermeeting period; the dollar rose about 12 percent from its low just after the February FOMC meeting, before easing back a little over the last few days. In addition to optimism about the U.S. economy, there was a growing perception that growth abroad was weakening and that foreign interest rates were now more likely to move lower, on average, than higher. Political turmoil in the Soviet Union appeared to affect the German mark adversely, and the dollar rose more against the mark than against the yen. These factors, however, seem unable to account fully for the extraordinary strength of the dollar. Whereas in the first days of the intermeeting period the Desk sold $850 million equivalent of marks to support the dollar, by the second week of March the Desk was selling dollars ($330 million) Foreign short-term interest rates on -4- average declined about 35 basis points over the period, while long-term rates were about unchanged. (5) At least partly in response to earlier declines in interest rates, the monetary aggregates have accelerated in recent months. M2 increased at an 8-1/2 percent annual rate in February, and partial data suggest growth has continued in March at about a 7 percent pace. This outcome would bring expansion over the December-to-March period to a 5-1/2 percent pace, considerably above the FOMC's expectation at the last meeting of 3-1/2 to 4 percent, and would leave M2 near the middle of its 2-1/2 to 6-1/2 percent target range. The bulk of the acceleration within M2 has occurred in liquid retail deposits--OCDs, savings, and MMDAs. Offering rates on these accounts have, as usual, responded quite sluggishly to the declines in market interest rates over the past several months, substantially reducing their opportunity costs. In addition, demand deposits also reversed their January decline, and currency growth remained brisk in February before moderating this month. The belated emergence of a response to opportunity costs, which had been narrowing since last summer, may suggest some return of confidence in the banking system, in light of the prospects for economic recovery and absence of new highly publicized 3. M1 expanded at a 14 percent rate in February and growth is estimated at about 7 percent in March. Reflecting a pickup in required reserves associated with the acceleration of transactions deposits, nonborrowed and total reserves growth increased in February to 15-1/2 and 10 percent rates, respectively. These measures are expected to be about flat in March, however, as excess reserves continue to decline on a monthly average basis and required reserves rise less rapidly. Growth of the monetary base slowed to a 16-1/2 percent rate in February, owing to a deceleration of currency growth, which nevertheless, at nearly 17 percent, was still quite rapid. In March, the base is expected to increase at about a 4 percent rate. -5- bank failures or depositor losses. Over the last two months, M2 has grown considerably more rapidly than predicted by econometric models, making up a small portion of the earlier shortfall. Nevertheless, given the slow growth late last year and in January, expansion in the first quarter on a quarterly average basis still is below model predictions, and M2 velocity is likely to decline at only about a 1 percent annual rate. (6) Whether the pickup in M2 also is associated with a greater willingness to lend by depositories (or at least no further intensification of restraint) is difficult to tell. Bank credit has strengthened in February and early March, but the spread of the prime over market rates has widened even further, and banks report that they have continued to tighten credit standards for businesses. M3 growth also accelerated--to a 10-1/2 percent rate in February, and a 4-3/4 percent pace estimated for March--bringing December-to-March growth to a 6-1/4 percent rate. How- ever, the strength of M3, which also ran well above expectations, reflected a number of influences unrelated to an expansion of credit through depositories. For example, a substantial portion of the increase in M3 over the first quarter was attributable to rapid growth of institution-only money market funds, which have been boosted by declines in money market rates during the past few months. In addition, an unanticipated rise in large time deposits over the past two months was due entirely to issuance by branches and agencies of foreign banks, primarily to substitute domestic CDs for federal funds and Eurodollar borrowings as a result of the elimination of the reserve requirement on nontransaction liabilities, which reduced the relative cost of domestic CDs. 4 Large time deposits at domestic banks and thrifts have continued to run off. (7) Private credit growth appears to have strengthened, but only a little from its very depressed pace in the months around year-end. Overall business borrowing has been damped by a fall-off in equity retirements as well as by weak fixed capital and inventory investment. Offer- ings of corporate bonds have risen sharply, as treasurers apparently believe that interest rates are unlikely to decrease further. But, in part, this issuance was used to fund a paydown of short-term debt, as the total of bank loans and commercial paper declined. Consumer loans at banks rose in February on a monthly average basis, even after adjusting for a changing volume of securitization across months, but leveled out over the latter part of February and in early March. exempt securities has increased. Issuance of tax- However, Treasury borrowing has been reduced substantially, albeit temporarily, during the latter part of the first quarter, reflecting contributions related to the war and the slow pace of RTC resolutions. In total, domestic nonfinancial sector debt in February grew 6-1/4 percent at an annual rate from its fourth-quarter 4. Regulation D for some time has exempted from reserve requirements net Eurodollar borrowings equal to 8 percent of a branch's assets (after certain adjustments). Thus, the reduction of nontransaction reserve requirements to zero eliminated the value of this favorable treatment of net Eurodollar borrowings and lowered the relative cost of domestic CDs. More generally, foreign banks, who need not pay FDIC premiums on U.S. deposits, have found that the lack of reserve requirements on CDs reduces incentives to book dollar deposits at IBFs and non-U.S. offices. These institutions also report that they now are funding greater volumes of overseas assets by issuing deposits in the United States and lending the proceeds to their foreign offices. -7base, leaving this aggregate in the lower half of its 4-1/2 to 8-1/2 percent monitoring range. MONEY, CREDIT, AND RESERVE AGGREGATES (Seasonally adjusted annual rates of growth) Dec '90 * Feb. Mar. to * QIV '90 to * Mar. Mar. 7-1/2 6-1/2 5-1/2 4-1/2 6-1/4 4-3/4 Domestic nonfinancial debt 5-1/21 5-1/21 Bank credit 2-3/41 2-1/21 Money and credit aggregates 14.1 8.6 10.6 Reserve measures Nonborrowed reserves 15.6 7-1/4 5-1/4 Total reserves Monetary base Memo: 16.4 6-3/4 11-1/2 (Millions of dollars) Adjustment plus seasonal borrowing Excess reserves 179 1807 1143 * - partly projected. 1. Through February. 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. Reserve data incorporate adjustments for discontinuities associated with changes in reserve requirements. Reserve figures for March include assumptions of $125 million for adjustment plus seasonal borrowing and $1.2 billion for excess reserves in the maintenance period ending April 3. Policy Alternatives (8) Three policy alternatives are presented below for Committee consideration. Under alternative B, federal funds would continue to trade around 6 percent and would be associated with adjustment plus seasonal borrowing initially of $125 million. An increase to about $250 million over the intermeeting period may be called for as seasonal borrowing continues its normal climb. Under alternative A, the federal funds rate would fall to 5-1/2 percent, effected either through a reduction in borrowing to $75 million or a 50 basis point cut in the discount rate and the same borrowing specification as in alternative B. As noted in recent bluebooks, it is technically feasible for federal funds to trade below the discount rate. However, the discount window becomes a marginally less effective buffer to unpredictable changes in reserve supply or demand, and the federal funds rate likely would be a little more volatile than if alternative A were achieved through a discount rate cut. Moreover, allow- ing the funds rate to fall below the discount rate is likely to give rise to market uncertainty about System intentions; in particular, there would be more speculation about whether a discount rate cut is forthcoming or whether a penalty discount rate is being instituted. Under alternative C, the federal funds rate would rise to 6-1/2 percent and the initial borrowing level would be increased to $175 million. (9) The structure of market interest rates does not now appear to incorporate expectations of any further easing in monetary policy in the weeks ahead; thus under alternative B, short-term interest rates are unlikely to change substantially, though they may edge lower. Private rates should slip off with the passing of quarter-end, and bills could -10- well benefit from steeper reductions in outstanding supplies after the April tax date. The greenbook forecast implies some further unwinding of the recent sharp rise in the dollar under the unchanged policy of alternative B. Still, with interest rate differentials now more favorable to dollar assets, the dollar should remain well above its February lows. Longer-term securities markets are likely to continue to be quite sensitive to data about developments in the real economy over the intermeeting period, as investors search for indications as to whether consumer and business responses to the end of the war are helping to propel a turnaround in the economy. Bond yields already seem to have built in some rebound in the economy, judging by their levels relative to inflation expectations and to short-term rates. Thus, they might not rise much, if at all, even should incoming information confirm that the economy was reaching a trough. (10) Under alternative A, money market rates would likely decrease by close to the full amount of the reduction in the federal funds rate, and the prime rate would be lowered 1/2 percentage point, given its already wide margin over funding costs. and substantially. The dollar would decline promptly The drop in interest rates and the dollar could be seen by market participants as adding further stimulus at a time when a rebound in the economy already is expected. In such circumstances, bond rates might not decline by much, and could even back up. A reversal of any adverse reaction would occur, however, if incoming data began to confirm that the easing had correctly anticipated weaker money growth, more favorable trends in prices, or a substantial further shortfall in economic activity. -11- (11) The tightening of policy under alternative C would surprise market participants, coming on the heels of recent easing measures, and bill rates would rise by 1/2 percentage point. Private money market rates could well rise by more and quality spreads retrace some of their recent declines. In particular, a portion of the improvement since year-end in the prices of securities of financial firms likely would be reversed by the unexpected increase in short-term rates. Increases in bond yields might be limited, however, by a sense that the Federal Reserve was taking early action to check potential inflation pressures in the coming recovery. In this environment, the dollar would be subject to further upward pressure. (12) The money growth paths projected under each alternative are given in the table below and in the table and charts on the following pages. Alt. A Alt. B Alt. C Growth from March to June M2 M3 M1 6-1/2 4 7 5-1/2 3-1/2 5-1/2 4-1/2 3 4 Implied growth from 1990:Q4 to June M2 M3 M1 5-1/2 4-1/2 6-3/4 5 4-1/4 6 4-1/2 4 5-1/2 (13) Under alternative B, M2 would expand at about a 5-1/2 percent rate over the March-to-June period, in line with its December-toMarch growth, placing it a little above the midpoint of its 1991 range. Expansion of money will continue to be boosted by previous declines in 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 3333.4 3357.3 3376.9 3333.4 3357.3 3376.9 3333.4 3357.3 3376.9 4124.4 4160.9 4177.1 4124.4 4160.9 4177.1 4124.4 4160.9 4177.1 826.7 836.4 840.9 826.7 836.4 840.9 826.7 836.4 840.9 3392.4 3410.5 3431.3 3391.0 3406.2 3422.7 3389.6 3401.9 3414.1 4191.0 4204.3 4217.6 4190.3 4202.2 4212.7 4189.6 4200.1 4207.8 845.4 850.3 855.8 844.8 848.6 852.5 844.2 846.9 849.2 1.0 8.6 7.0 1.0 8.6 7.0 1.0 8.6 7.0 3.3 10.6 4.7 3.3 10.6 4.7 3.3 10.6 4.7 1.9 14.1 6.5 1.9 14.1 6.5 1.9 14.1 6.5 5.5 6.4 7.3 5.0 5.4 5.8 4.5 4.4 4.3 4.0 3.8 3.8 3.8 3.4 3.0 3.6 3.0 2.2 6.4 7.0 7.8 5.5 5.5 5.5 4.6 4.0 3.2 Quarterly Ave. Growth Rates 1990 Q1 Q2 Q3 Q4 1991 Q1 Q2 6.2 3.9 3.0 2.2 3.4 6.6 6.2 3.9 3.0 2.2 3.4 6.1 6.2 3.9 3.0 2.2 3.4 5.5 2.9 1.3 1.6 1.1 4.1 4.8 2.9 1.3 1.6 1.1 4.1 4.6 2.9 1.3 1.6 1.1 4.1 4.3 5.2 4.2 3.7 3.4 5.5 7.6 5.2 4.2 3.7 3.4 5.5 6.7 5.2 4.2 3.7 3.4 5.5 5.8 Dec. 90 to Mar. 91 Mar. 91 to June 91 5.6 6.4 5.6 5.4 5.6 4.4 6.2 3.9 6.2 3.4 6.2 2.9 7.5 7.1 7.5 5.5 7.5 3.9 Q4 Q4 Q4 Q4 Q4 3.9 3.4 5.1 4.7 5.4 3.9 3.4 4.8 4.6 4.9 3.9 3.4 4.5 4.5 4.5 1.7 4.1 4.5 4.6 4.4 1.7 4.1 4.4 4.6 4.2 1.7 4.1 4.3 4.6 4.0 4.2 5.5 6.6 6.4 6.8 4.2 5.5 6.2 6.3 6.1 4.2 5.5 5.7 6.1 5.4 Levels in billions 1991 January February March April May June Monthly Growth Rates 1991 January February March April May June 89 90 90 90 90 to to to to to Q4 90 Q1 91 Q2 91 Apr. 91 June 91 1991 Target Ranges: 2.5 to 6.5 1.0 to 5.0 Chart 1 ACTUAL AND TARGETED M2 Billions of dollars 3600 Actual Level - - - Estimated Level * Short-Run Alternatives -- 3550 3500 3450 2.5% 3400 -. 3400 -1 3350 -1 3300 II I O N 1990 II I D J II F I I M I A I I I M II J 1991 I J A I I S I I O I I N 3250 D Chart 2 ACTUAL AND TARGETED M3 Billions of dollars 4350 Actual Level -- -Estimated Level * Short-Run Alternatives - , -- 4300 -- 4250 " -1 4200 r r 1% - 4150 -- 4100 -- 4050 rC r r r c cr c r s r r r c O I I I | N 1990 I I D J I I F I M I A M J J 1991 A S I I i I I I I I I I I I I I I I O 4000 i N D Chart 3 M1 Billions of dollars 920 SActual Level -- Estimated Level ------ Growth From Fourth Quarter 900 p p I p I p p -1 880 p p I S p -'5% -1 860 C -- ' 0% II O II N 1990 iI D I I I J 1I F I I I M I A I I I M I I J J 1991 I I I A I I S 840 - 820 I I I O -1 N D Chart 4 DEBT Billions of dollars 11400 Actual Level * Projected Level -- 11200 # -- 11000 4.5% -10800 -10600 -1 10400 -- 10200 I I~~ I I II O N 1990 D J I i F I M I A I M I I J J 1991 I A I S I 0 I N D -13- market interest rates, but these effects will be less over the second quarter than over the first.5 On the other hand, the projected pickup in nominal spending will be working to buoy M2 growth over coming months. As in recent months, most of the increase in M2 will occur in the form of inflows to liquid retail balances, owing to their narrow opportunity costs, as offering rates come down only a bit in response to recent declines in market rates. Growth in small time deposits, by contrast, should continue anemic, given the much larger adjustment of the rates on these deposits to declines in market yields. (14) On a quarterly average basis, M2 under alternative B would expand at a 6 percent annual rate in the second quarter, a shade faster than nominal GNP. Expansion at this rate would be a bit higher than pre- dicted by the staff money demand models, implying a partial makeup of the shortfall of recent quarters. The projection thus assumes a continuation of the very recent experience, in which some of the unusual factors that 5. Growth rates for individual months are likely to be influenced by tax payments this year. Reflecting weakness in income last year, nonwithheld tax payments due by April 15 could well fall short of those embedded in the seasonal adjustment factors for monetary aggregates. Thus, both the buildup of balances prior to that date and the decline in balances after it may be smaller than usual; in these circumstances, growth in M2 would be reduced in April but boosted in May. In addition, June growth could speed up a little more as the economic recovery foreseen by the staff shows through to demands for money. 6. Under alternative B, M1 also is projected to grow at an annual rate of 5-1/2 percent over the March-to-June period, as transaction deposits complete their adjustments to interest rate changes, and as currency demand abates with the end of war-related uncertainties. The level of demand deposits may be boosted to some degree by greater mortgage refinancing at the reduced levels of rates on fixed-rate mortgages of recent months; prepayments of securitized mortgages generally are held in demand deposits for some time before being passed through to security holders. However, at current interest rates, the effects of this on M1 growth rates are expected to be quite small in coming months. Growth of the monetary base is expected to slow to a 5-1/4 percent rate in the second quarter. -14- had been damping money growth in earlier quarters seem less pronounced. The recent recovery in confidence by depositors and investors in the banking system is not expected to be reversed, and against this backdrop, constriction of credit supplies by banks should not intensify. While opportunity costs will rise as offering rates continue to adjust, they are not expected to become unusually wide in coming months. (15) Growth in M3 would slow to a 3-1/2 percent rate over the March-to-June period in the case of alternative B. To be sure, a modest pickup in bank lending and in the associated needs for funds is anticipated as credit demands strengthen with spending; banks should be willing to meet this demand in light of improved prospects for borrowers, enhanced access to capital markets and the recent regulatory initiatives. However, rate relationships are expected to be less favorable to money funds. In addition, the unusual issuance of large time deposits by U.S. branches of foreign banks related to the reserve requirement cut is assumed to slow in the second quarter. RTC resolution activity will pick up over the quar- ter, so that increasing quantities of thrift assets will end up financed by Treasury securities instead of M3. Even with its slowing, M3 would remain above the midpoint of its annual range by June. On a quarterly average basis, M3 would grow at a 4-1/2 percent rate in the second quarter, once again lagging growth in nominal income. (16) Private debt growth should be a little stronger in the second quarter than in the first as the economy recovers, though below the growth in spending. Household borrowing will firm as consumer spending, including spending on durables, resumes expanding and as housing activity picks up further. Although access to credit by some households might be -15- curtailed, especially as delinquencies continue to rise, narrow spreads on mortgages and asset-backed securities recently suggest that credit constraints on households are unlikely to be very important. By contrast, the small business and commercial real estate sectors will continue to face stringent credit conditions. For firms with access to securities markets, however, limitations on credit should prove to be less of a factor, as indicated by reduced quality spreads. Overall, corporate borrowing is expected to edge higher, albeit largely reflecting a transitory pickup in share retirements. Stresses on state and local govern- ments will result in some boost to their borrowing, mostly temporary short-term borrowing to cover deficits. Federal debt growth will pick up later in the quarter once RTC resolution activity revives. Growth in the debt of all domestic nonfinancial sectors is expected to be merely 5 percent from February to June, keeping this aggregate in the lower half of its 1991 monitoring range. (17) Under alternative A, M2 would strengthen to a 6-1/2 percent rate over the March-to-June period. The pickup would be concentrated in retail liquid accounts as their opportunity costs fell further. By June, this aggregate would be well into the upper half of its annual range. M3 would expand at a 4 percent rate over this period, buoyed by larger inflows to money funds and by some spillover of the strength in M2. (18) The tighter money market conditions of alternative C would slow M2 from the pace of December to March, holding this aggregate down to the midpoint of its 1991 range by June. M3 growth over the three months would moderate to a 3 percent rate, with some risk that expansion could be -16- even more damped if there were an appreciable adverse reaction in bank capital and funding markets. -17- Directive Language (19) Draft language for the operational paragraph, including the usual options and updating, is presented below. OPERATIONAL PARAGRAPH In the implementation of policy for the immediate future, the Committee seeks to DECREASE SLIGHTLY (SOMEWHAT)/ maintain/ INCREASE SLIGHTLY (SOMEWHAT) the existing degree of pressure on reserve positions. Depending upon progress toward price stability, trends in economic activity, 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 conditions are expected to be consistent with growth of [DEL: both]M2 and M3 over the period from [DEL: December through]March THROUGH JUNE at annual rates of about ___ AND ____ [DEL: 3-1/2 to 4] percent, RESPECTIVELY. March 22, 1991 SELECTED INTEREST RATES (percent) Short-Term S CDs I__ _-I 1 secondary market reasury bills seconday market federal unds ,! 2 - • 4 3month 51 money I on-Term corporate I bank prme comm. paper maket mutual 1-month fund loan US govemment constant maturity yields 3-yM 30-YMr -J municipal Bond A utility recently 12 a, B. 1 -H conventional home mongages secondary market fixed-rate primary market iedi-ral 15 is 90 -- High Low 8.33 7.16 7.96 6.54 8.06 7.16 10.50 10.00 9.07 7.94 9.13 8.00 10.50 9.55 10.99 9.91 10.67 9.56 91-- High Low 7.46 6.10 6.46 5.83 7.37 6.05 9.93 9.00 8.21 7.79 8.40 7.97 9.96 9.46 9.97 9.52 9.75 9.25 Monthly Mar Apr May Jun Jul Aug Sep Oct Nov Dec 90 90 90 90 90 90 90 90 90 90 8.28 8.26 8.18 8.29 8.15 8.13 8.20 8.11 7.81 7.31 790 7.77 7.74 7.73 7.62 7.45 7.36 7.17 7.06 6.74 7.85 7.84 7.76 7.63 7.52 7.38 7.32 7.16 7.03 6.70 7.65 7.69 10.00 10.00 7.68 10.00 7.66 7.64 7.49 7.47 7.45 7.34 7.20 10.00 10.00 10.00 10.00 10.00 10.00 10.00 9.92 10.09 10.04 9.85 9.96 10.29 10.28 10.23 10.07 9.95 10.61 10.75 10.68 10.37 10.26 10.41 10.45 10.47 10.25 9.95 10.27 10.37 10.48 10.16 10.04 10.10 10.18 10.18 10.01 9.67 Jan Feb 91 91 6.91 6.25 6.22 5.94 6.28 5.93 6.92 6.10 9.52 9.05 9.83 9.54 9.89 9.63 9.64 9.37 Weekly Dec 5 90 Dec 12 90 Dec 19 90 Dec 26 90 7.60 7.25 7.29 7.16 7.02 6.88 6.77 6.54 6.96 6.75 6.70 6.60 7.26 7.21 7.16 7.16 10.00 10.00 10.00 10.00 9.91 9.92 9.96 9.99 9.94 9.91 9.96 9.97 9.81 9.56 9.64 9.68 Jan 2 91 Jan 9 91 Jan 16 91 Jan 23 91 Jan 30 91 7.17 6.40 6.77 6.88 7.46 6.46 6.43 6.10 6.10 6.19 6.49 6.44 6.21 6.22 6.23 7.37 7.08 6.91 6.79 6.76 9.93 9.50 9.50 9.50 9.50 9.85 9.96 9.77 9.80 9.65 9.80 9.97 9.93 9.84 9.70 9.56 9.63 9.75 9.61 9.56 Feb 6 91 Feb 13 91 Feb 20 91 Feb 27 91 6.32 6.29 6.26 6.31 6.01 5.89 5.92 5.99 5.99 5.88 5.90 5.98 6.65 6.25 6.35 6.29 9.29 9.00 9.00 9.00 9.53 9.46 9.53 9.64 9.60 9.52 9.68 9.85 9.36 9.25 9.29 9.40 Mar 6 91 Mar 13 91 Mar 20 91 6.47 6.17 6.10 6.06 5.92 5.83 6.06 5.94 5.86 6.19 6.15 6.05 9.00 9.00 9.00 9.62 9.54 9.81 9.71 9.49 9.50 Daily Mar 15 91 Mar 21 91 Mar 22 91 5.96 6.22 5.80 5.87 5.82 5.87 5.92 5.99 6.23 6.33 6.34 6.27 6.37 9.00 9.00 9.00 7.26 7.40 8.10 8.16 | IARM in 8.30 8.34 NOTE Weekly data for columns 1 through 1 are statement week verages. Data In column 7 are taken from Donoghue's Money Fund Repot Columns 12 13 and 14 are 1-day quotes for Friday Thursday or Friday respectively, following the end of 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 delvery commitments. Column 15 Is the average contract rate on new commitments for fixed-rate mortgages(FRMs) wlth 80 percent loan-to-value ratos at maor Instfiullodal lenders Column 16 I the average Initial contract rate on new commitments for 1-year. adjustable-rate mortgages(ARMs) at major Institutional lenders ofering both FRMs and ARMs with the same number of discount points p -- preliminary data Strictly Confidential (FR). II Class Money and Credit Aggregate Measures Seasonally adjusted MAR. Money stock measures and liquid assets M1 Period M2 nontransactions components in M3 only 4 Bank credit M3 L 5 6 total loans and inve tments 7 25, FOMC 1991 Domestic nonfinancial debt1 U.S. government' other' total' B 9 to 1 2 in M? 3 ANN. GROWTH RATES (%) ANNUALLY (Q4 TO Q41 1988 1989 1990 4.2 0.6 4.2 5.2 4.7 3.9 5.5 6.1 3.8 10.7 -0.6 -6.4 6.3 3.6 1.7 7.2 4.8 1.8 7.7 7.5 5.4 8.0 7.5 11.0 9.5 7.8 5.5 9.2 7.7 6.8 QUARTERLY AVERAGE 1990-1st QTR. 1990-2nd QTR. 1990-3rd QTR. 1990-4th QTR. 5.2 4.2 3.7 3.4 6.2 3.9 3.0 2.2 6.5 3.8 2.7 1.8 -9.6 -9.1 -3.9 -3.6 2.9 1.3 1.6 1.1 2.8 0.9 1.9 1.7 5.6 6.4 6.1 2.9 6.8 9.7 14.4 11.4 6.2 6.2 4.9 4.3 6.3 7.0 7.1 6.0 8.6 5.4 4.5 -0.3 5.9 -1.2 8.6 7.8 -0.9 3.1 3.1 7.9 5.4 3.8 1.1 2.9 1.8 5.1 4.3 1.4 0.2 1.7 7.7 5.4 3.5 1.5 1.8 2.7 4.0 3.2 2.2 -0.7 1.2 -13.9 -15.5 -7.1 -4.3 -7.1 -2.1 0.0 -10.3 -1.7 -1.5 -3.7 3.5 1.2 1.6 0.0 0.9 1.0 4.1 1.5 0.8 -0.1 0.7 1.9 2.9 1.4 -4.2 4.8 1.0 1.8 5.2 0.1 1.1 0.9 7.0 8.5 6.9 3.2 6.6 5.8 9.8 1.4 2.6 1.3 3.1 8.3 12.8 7.5 7.5 14.9 13.9 18.9 11.0 5.6 15.5 13.1 7.3 7.2 6.7 4.5 4.1 5.1 5.2 5.5 4.4 3.2 2.5 7.6 8.5 6.9 5.2 6.6 7.2 8.4 6.8 4.7 6.1 5.1 1.9 14.1 1.0 8.6 0.8 6.8 13.0 19.1 3.3 10.6 2.3 -1.0 6.3 10.9 14.8 2.6 3.4 4.6 6.2 821.2 823.3 825.4 3325.2 3325.8 3330.5 2504.0 2502.5 2505.1 785.9 784.9 782.5 4111.1 4110.7 4113.0 4956.2 4960.7 4964.3 2713.6 2716.6 2723.6 2473.4 2505.4 2532.8 7879.7 7900.5 7917.2 10353.1 10405.9 10450.0 826.7 836.4 3333.4 3357.3 2506.7 2521.0 791.0 803.6 4124.4 4160.9 4973.8 2721.2 2735.1 2555.9 2587.5 7934.5 7957.3 10490.4 10544.7 4 11 18 25 833.3 836.4 838.7 836.0 3345.9 3354.5 3359.4 3361.2 2512.7 2518.1 2520.7 2525.3 798.4 805.4 805.5 804.0 4144.4 4159.9 4164.9 4165.3 4 p 11 p 837.6 839.6 3367.1 3373.2 2529.4 2533.7 800.7 799.7 4167.7 4172.9 MONTHLY 1990-FEB. MAR. APR. MAY JUNE JULY AUG. SEP. OCT. NOV. DEC. 1991-JAN. FEB. p LEVELS S(BILLIONS) MONTHLY 1990-OCT. NOV. DEC. 1991-JAN. FEB. p WEEKLY 1991-FEB. MAR. 1. : Debt data are on a monthly average basis, derived by averaging end-of-month discontinuities. p-preliminary pe-preliminary estimate levels of adjacent months, and have been adjusted to remove Strictly Confidential (FR)Class Components of Money Stock and Related Measures seasonally adjusted unless otherwise noted Currency Demand deposits Other checkable deposits Overnight RPs and Eurodollars NSA1 1 2 3 210.8 220.9 245.1 287.3 278.9 277.1 MONTHLY 1990-FEB. MAR. 226.6 228.4 APR. MAY JUNE Small denomination time deposits' Money market mutual funds Institu general tions purpose only and broker/ dealer 9 8 II FOMC MAR. 25, 1991 Large denomination time deposits' Term RPs NSA' Term Eurodollars NSA' Savings bonds Shortterm Treasury securities Commer. cial paper' Bankers accep. tance 10 11 12 13 14 15 16 MMDAs Savings deposits 4 5 6 280.1 282.9 292.8 83.4 76.1 78.4 505.8 482.0 424.5 402.9 411.1 1022.4 1142.4 1163.3 237.5 308.9 506.5 344.1 86.7 101.4 121.9 538.8 565.0 511.5 123.2 106.6 93.8 102.8 80.2 70.2 108.8 116.8 125.2 266.8 321.5 331.7 326.6 350.4 358.1 40.5 40.4 33.8 279.4 278.9 287.5 289.8 82.3 81.9 491.8 495.7 408.7 410.2 1146.8 1149.9 324.2 325.9 103.4 105.2 554.9 549.3 100.5 98.4 68.4 66.7 118.4 119.2 327.3 336.9 345.6 344.1 38.5 37.2 230.3 231.9 233.7 278.1 275.8 276.3 291.7 292.0 293.7 79.4 83.2 82.3 499.3 500.5 502.3 411.5 411.3 411.8 1152.2 1153.5 1154.6 327.0 325.3 327.5 106.9 107.6 108.1 543.7 540.5 538.0 98.2 99.3 102.2 65.3 67.1 64.4 119.9 120.7 121.4 329.9 315.4 331.7 351.9 349.1 349.1 36.0 35.4 34.7 JULY AUG. SEP. 235.7 238.4 241.5 275.6 278.0 279.1 291.7 292.1 293.0 84.0 82.6 81.5 503.4 505.9 507.4 412.7 412.7 412.3 1156.8 1158.3 1159.9 329.2 335.8 339.2 109.8 114.0 116.2 535.0 529.2 521.9 100.5 102.0 98.3 65.1 68.2 69.4 122.2 334.3 329.8 333.8 348.2 345.9 357.9 33.0 32.3 31.8 OCT. NOV. DEC. 243.9 245.0 246.4 277.1 277.2 276.9 291.8 292.8 293.7 83.6 77.7 73.9 506.7 506.8 505.9 411.5 411.1 410.7 1162.2 1162.9 1164.9 341.7 343.0 347.7 119.6 120.5 125.7 515.1 512.5 507.0 95.6 95.7 71.1 69.6 69.8 124.5 125.2 126.0 330.4 332.9 90.2 331.9 357.6 357.9 358.8 32.6 34.0 34.7 251.6 255.1 272.9 276.2 293.9 296.8 71.5 71.1 505.1 511.3 412.0 415.6 1163.7 1162.5 356.3 360.5 130.1 139.3 511.5 515.0 88.5 87.0 69.5 71.3 126.7 333.1 353.6 35.9 Period LEVELS (SBILLIONS) : ANNUALLY 14TH QTR.) 1988 1989 1990 1991-JAN. FEB. p -- 7 123.0 123.8 - 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 March 22, 1991 Treasury bills Period Nt Redeptl purchaes 7,635 1,468 17.448 1989 -- 01 -02 -03 -04 1990 -- 01 -02 --Q3 -04 1990 March April May June July August September October November December 1991 January Febuary STRICTLY CONFIDENTIAL (FR) CLASS II-FOMC NET CHANGES IN SYSTEM HOLDINGS OF SECURITES 1 Millions of dollars, not seasonally adjusted Treasuy coupons _Federal Not purchase 3 4 Nt Nt purhas 1-5 change (-) 2,200 12,730 4,400 -3.842 2,496 6,450 9,264 2.200 2,400 3,200 -3.799 10,892 5.115 5,241 1.400 4,930 5.435 -11,263 13,048 5-10 2,176 1.404 258 327 475 -100 over 10 Net change Redemptions Net (-) Change 1,398 284 agencies outright redemptions holding -)otal 9.665 1,315 375 - -6.042 96 -9,650 4,333 -248 2,104 -172 -369 t R 6 14,513 -10,390 13,240 1,557 -1.683 9,157 -6,477 2,075 -5,591 924 -893 3,877 -9,921 3.934 -5,199 10,892 5,115 10,964 5,045 3,000 2,241 2.230 -4.081 509 95 12.614 3,000 543 5,796 3.365 1.732 287 4,197 631 933 6,658 -5,350 742 5,818 3,365 1.782 254 4,160 631 899 6.983 5,651 -43 -1,260 -378 2,146 2863 1,110 -3,878 -1,224 509 13.329 -120 1,967 1,000 -1.120 1,120 2,417 -5.890 -1,127 -1,151 -100 1.000 1,000 2,151 1,100 -1.374 -5.175 543 5,796 3.365 1,732 287 4,197 831 933 6.658 -2,350 -5,000 1,967 100 - 350 - Weekly January January January January Januy 2 9 16 23 SO February February February February 6 13 20 27 225 381 1,193 March 6 March 13 March 20 289 161 31 Memo: LEVEL (bL $) 7 March 20 Ne -2.151 -1,100 225 381 1,193 120.9 13.7 I 24.7 1. Change from end-of-priod to end-o-piod. 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 bllb. Excludes maturity shift and rollover of maturing issues. 4. Weekly net purchases of Treasuy coupons are summed over all meturites. -854 - 2,847 -1,250 225 381 1,643 5,332 3,466 -2,757 839 1,061 931 2,460 -7,177 9,762 252.6 124.9 1. __________________________________________________________ - -6.6 .L.I~. 5. Reiects net change in redemptions (-) of Treasury and agency securities. 6. Includes change n RPs (+), mached sle-plurchase transactions (-), and matched purchase sale transactions (+). 7. The levels of agency isaues were as follows: wi.1 March 20 2.7 1-5 2.4 i 5-10 1.0 oar 1 02 lbtni I 6.3 

Federal Reserve (1991, March 25). Bluebook. Bluebooks, Federal Reserve. https://whenthefedspeaks.com/doc/bluebook_19910326

@misc{wtfs_bluebook_19910326,
  author = {Federal Reserve},
  title = {Bluebook},
  year = {1991},
  month = {Mar},
  howpublished = {Bluebooks, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/bluebook_19910326},
  note = {Retrieved via When the Fed Speaks corpus}
}