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 10, 1991 MONETARY POLICY ALTERNATIVES Recent Developmnts (1) In the period immediately after the March FOMC meeting the Desk sought to maintain existing reserve pressures, consistent with federal funds continuing to trade in the area of 6 percent. Reserve targets were based initially on an allowance for adjustment plus seasonal borrowing of $125 million. Through the end of April, the federal funds rate averaged a little below 6 percent, with downward pressure coming at times from market anticipation of further policy easing and from unexpected surpluses of reserves. On April 30, in response to indications of continued economic weakness and abating inflationary pressures, the discount rate was reduced 1/2 percentage point to 5-1/2 percent. Half of this reduction was allowed to pass through to the federal funds rate. Consistent with the wider spread between the federal funds rate and the discount rate, the borrowing allowance was raised by $25 million.1 Thus far in the current maintenance period, the federal funds rate has averaged 5.78 percent, and borrowing is just below its path allowance of $200 million. Borrowing during each complete maintenance period since the FOMC meeting averaged close to its allowance. (2) Most money market interest rates fell 35 to 45 basis points during the intermeeting period, somewhat more than the decrease in the federal funds rate. 2 About half of the decline occurred in advance of 1. In addition, the borrowing allowance was increased by $25 million on April 18, and again on May 2, to keep up with expected increases in seasonal borrowing. 2. Discussions of interest and exchange rates and stock prices are based on data through noon, May 10. the policy easing, as the near-term response of aggregate demand to the end of the Gulf War and to earlier monetary policy easings seemed to be less buoyant than many had expected. Banks cut the prime rate 1/2 per- centage point shortly after the easing but, at 8-1/2 percent, it remains high relative to market interest rates. Despite the sense of a delay in the recovery, market participants appeared to retain optimism about longer-term economic prospects: Treasury bond yields dropped less than 10 basis points over the intermeeting period; risk premia on corporate debt, which had fallen sharply in February and March, declined further, in some cases to or below levels prevailing before the recession; and major stock price indexes, although not sustaining the record levels reached midway through the period, still rose on balance. Prices of bank debt and equity outpaced the broader averages, reflecting the anticipated effects of lower interest rates on bank profitability as well as firstquarter earnings reports that, in general, were not as bad as had been feared. (3) Despite the drop in U.S. interest rates, the dollar rose almost 2 percent on a weighted average basis over the intermeeting period amid considerable volatility. Although no foreign authorities followed the Federal Reserve's easing move, short-term interest rates abroad declined by about 25 basis points over the period, mitigating downward pressures on the dollar from the drop in rates here. The dollar was boosted by political developments in Germany and the Soviet Union, particularly in late April when it rose rapidly against the mark. The dollar dropped sharply from its late April peak, especially following the Federal -3Reserve's discount rate action, but has since recovered somewhat. The Desk did not intervene. (4) After accelerating earlier in the year, the monetary aggregates slowed appreciably in April. Though M2 growth was only 2-1/2 percent at an annual rate, it was sufficient to maintain this measure near the middle of its annual range. M3 stalled last month after meager expansion in March, bringing this aggregate down into the middle portion of its annual range. (5) M2 growth for April was well below expectations, and its sluggishness appears to reflect a number of factors. Currency stopped growing last month, as net demands from abroad apparently turned negative on balance. Some slowing of the monetary aggregates had been anticipated this April, in part owing to lower final tax liabilities for 1990 and an associated smaller-than-usual buildup of liquid household balances. In the event, tax payments came in even below projections, likely contributing to the unexpected weakness of M2. 3 Over the years, April money growth frequently has deviated from expectations, reflecting the 3. With contractions in currency and demand deposits and modest growth in other checkable deposits, M1 fell at a 1 percent annual rate in April, and required reserves were flat. The average level of excess reserves declined a little further, to $1,050 million, only about $100 million or so above the level typical before the reduction in reserve requirements. The slight decline in currency, together with a drop in total reserves, caused the monetary base to contract at a 1-1/2 percent annual rate last month. -4- MONEY, CREDIT, AND RESERVE AGGREGATES (Seasonally adjusted annual rates of growth) QIV'90 to March April 9.3 -1.0 5.5 7.5 2.6 4.3 2.7 0.0 3.6 April Money and credit aggregates Domestic nonfinancial debt 5.01 Bank credit -0.1 2.9 Reserve measures Nonborrowed reserves2 Nonborrowed reserves -0.4 -2.6 5.7 Total reserves -1.1 -3.7 4.9 -1.4 10.4 Monetary base Memo: (Millions of dollars) Adjustment plus seasonal borrowing Excess reserves 145 1179 1050 1. Q4 to 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. Reserve data incorporate adjustments for discontinuities associated with changes in reserve requirements. -5- difficulty of capturing massive tax-related flows in seasonal factors. 4 The expansionary effects of the drop in short-term rates on money demand may have been mitigated to the extent that holders of small time deposits and money funds were encouraged by the unusually low level of own rates and the steep yield curve to shift funds to capital market instruments. Finally, the shortfall in money growth may be partly related to the lower-than-expected nominal income implied by recent data. (6) The weakness of M3, while reflecting in part the sluggish expansion of M2, also accords with a picture of contracting credit at depository institutions. Bank credit was unchanged in April; all major loan categories showed appreciable weakness. The modest growth of core deposits and the decline in loans left banks with a surfeit of funds, leading domestically chartered banks to continue to purchase substantial volumes of securities and to run off large time deposits. Thrift in- stitutions also continued to pay down sizable volumes of large CDs in April, while their core deposits rose only slightly, suggesting that the drop in their assets continued despite a lull in RTC activity. Though still brisk, issuance of large CDs by U.S. branches and agencies of foreign banks slowed, reflecting quarter-end downsizing in response to capital standards. By and large, the proceeds of these CDs appear not to be financing credit to U.S. residents, but rather to be substituting for other sources of funding at the U.S. branches and agencies and their offices abroad. Thus far this year, increases in these Yankee CDs have 4. Partial data for the first week in May show a substantial rebound in M2, supporting the notion that some of the April weakness was due to temporary tax-related influences. accounted for two-thirds of the 3-1/2 percent annualized growth in M3 from its fourth-quarter base. (7) Growth of domestic nonfinancial sector debt apparently remained damped in March and April, leaving this aggregate well down in its monitoring range. In the federal sector, borrowing needs have been limited temporarily by contributions related to Operation Desert Storm and by the slow pace of RTC resolutions. to have remained weak. Private credit growth appears Demands for funds this year have been restrained not only by slow spending, but also by a marked abatement of net equity retirements as corporate restructuring ebbed and equity issuance surged. On the supply side, securities markets have become more receptive to private borrowers, including those with below-investment grade ratings. In the improved securities market environment, banks have raised substantial volumes of debt and equity capital in recent months, but as indicated by the latest survey of senior loan officers and by continued wide spreads of bank lending rates over costs of funds, they remain very cautious lenders. Reflecting these patterns, offerings of nonfinancial corporate bonds and commercial paper were brisk, with the funds apparently used in part to pay down bank loans. The few available indicators for the household sector point to quite sluggish borrowing. Consumer loan growth at banks in April was anemic, even after adjusting for securitizations, and home equity loans at banks continued their sharp -7- deceleration of the past few months. Widening spreads between rates on mortgage and consumer debt, on the one hand, and those on household assets, on the other, may be encouraging some deleveraging of this sector. Policy Alternatives (8) Two policy alternatives for Committee consideration are discussed below. Under alternative B, the federal funds rate would remain in the 5-3/4 percent area, in association with an initial specification for adjustment plus seasonal borrowing of $225 million--an increase of $25 million from the current level to take account of the likely rise of seasonal borrowing. Under alternative A, federal funds would trade around 5-1/4 percent; this level could be achieved either by a reduction in the initial borrowing specification to $175 million together with the current 5-1/2 percent discount rate, or by a cut in the discount rate to 5 percent combined with the $225 million initial borrowing specification. 5 Drop- ping the funds rate below the discount rate and operating at frictional levels of borrowing could have the minor disadvantage of further circumscribing the role of the discount window in cushioning unexpected shifts in reserve supply and demand, thereby adding a little to volatility in the funds rate. (9) Money growth projections under the two alternatives are shown below. (More detailed data appear in the table and charts on the following pages.) Under both alternatives, the monetary aggregates are expected to strengthen in May and June from their reduced April rates, keeping M2 and M3 in the middle portions of their annual ranges through midyear. The projected pickup in M2 growth primarily reflects the unwind- ing of apparently tax-related weakness in April. The effects of previous 5. Under any of these policy approaches, further increases in seasonal borrowing are likely to necessitate upward technical adjustments to the borrowing assumption over the intermeeting period. -9declines in interest rates continue to contribute to the growth of M2 relative to income. However, largely because of the downward revisions to forecasts for nominal income in the second quarter, we now expect M2 growth over March to June to fall short of the pace specified in the last directive. This shortfall occurs despite the slight easing in money mar- ket rates at the end of April and persists even with the further drop in rates under alternative A. The March-to-June growth projected for M3 also has been lowered since the last meeting, but in this case the reduction results entirely from the aggregate's unexpected weakness in April. Pro- jected expansion of M3 in May and June is about the same as in the last bluebook, as additional issuance of CDs by U.S. branches and agencies of foreign banks offsets the effect of slower growth in M2 and depository credit. Alt. A Alt. B 4-1/2 2-1/4 3-3/4 4 2 3 4-3/4 3-1/2 5-3/4 4-1/2 3-1/2 5-1/2 Growth from March to June M2 M3 Ml Implied growth from 1990:Q4 to June M2 M3 M1 Alternative Levels and Growth Rates for Key Monetary Aggregates M2 Levels in billions 1991 January February March April May June Monthly Growth Rates 1991 January February March M3 M1 Alt. A Alt. B Alt. A Alt. B Alt. A Alt. B 3333.1 3357.2 3378.3 3333.1 3357.2 3378.3 4126.9 4164.2 4173.6 4126.9 4164.2 4173.6 826.7 836.4 842.9 826.7 836.4 842.9 3385.7 3397.8 3416.7 3385.7 3396.7 3412.0 4173.7 4181.4 4196.3 4173.7 4181.0 4193.9 842.2 846.6 850.6 842.2 846.2 849.0 1.1 8.7 7.5 1.1 8.7 7.5 3.7 10.8 2.7 3.7 10.8 2.7 1.9 14.1 9.3 1.9 14.1 9.3 o April May June 2.6 4.3 6.7 2.6 3.9 5.4 0.0 2.2 4.3 0.0 2.1 3.7 -1.0 6.2 5.8 Quarterly Ave. Growth Rates 1990 Q1 Q2 Q3 Q4 1991 Q1 Q2 6.2 3.9 3.0 2.1 3.6 5.2 6.2 3.9 3.0 2.1 3.6 5.0 2.9 1.3 1.6 1.0 4.3 2.8 2.9 1.3 1.6 1.0 4.3 2.7 5.2 4.2 3.7 3.4 5.8 5.3 5.2 4.2 3.7 3.4 5.8 5.0 Dec. 90 to Mar. 91 Mar. 91 to June 91 5.8 4.5 5.8 4.0 5.8 2.2 5.8 1.9 8.5 3.7 8.5 2.9 Q4 Q4 Q4 Q4 Q4 3.8 3.6 4.4 4.3 4.7 3.8 3.6 4.3 4.3 4.4 1.7 4.3 3.5 3.6 3.5 1.7 4.3 3.5 3.6 3.4 4.2 5.8 5.6 5.5 5.7 4.2 5.8 5.5 5.5 5.4 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 -1.0 5.7 4.0 Chart 1 ACTUAL AND TARGETED M2 Billlons of dollars 3600 Actual Level * Short-Run Alternatives 3550 3500 3450 3400 3350 3300 O N 1990 D J F M A M J J 1991 A S O N D 3250 Chart 2 ACTUAL AND TARGETED M3 Billions of dollars 4350 Actual Level SShort-Run Aternatives -- 4300 -- 4250 ..- -^ ^o' -1 4200 1% -j 4150 -I 4100 r r r r -- 4050 S I O I I N 1990 D 1 J I F I M I A I M I J J 1991 I I A I S I O I N 4000 D Chart 3 M1 Billions of dollars Actual Level ------ Growth From Fourth Quarter ,-'10% I I I I --I 00 I I S -- s880 I I I I I I I I I -J I 860 S I SA I I * I II r- -I -- 840 ° B r, I rp I 0 r .. . . . . . . . . . 0% . . . -4 820 I O I N 1990 I D I J I F I M I A I M I J I J 1991 I A I S I O I N D Chart 4 DEBT Billions of dollars 11400 - Actual Level * Projected Level -- 11200 -I 11000 4.5% -4 10800 I O I N 1990 I D I J I F I M I A I M -- 10600 -1 10400 -- 10200 I J J 1991 A S O N D -11- (10) Under alternative B, M2 is expected to strengthen to a 4-3/4 percent pace in May and June. Much of the acceleration in M2 is likely to be concentrated in its transaction component. M1 should resume growing at nearly a 5 percent pace over the two months, as demand deposits and OCDs recover from their tax-related weakness and are buttressed later in the quarter by the expected strengthening in nominal income. Moreover, currency expansion is expected to reemerge with the waning of reflows from the Persian Gulf region. The nontransaction component of M2 also is likely to accelerate; money funds should rebound a bit, and, with a smaller amount thought to be maturing, the runoff of retail time deposits probably will abate from the unusually rapid pace of April. The 4 percent growth of M2 from March to June under alternative B implies a quarterly average growth rate of 5 percent; this exceeds the staff's projected growth of nominal GNP by 2 percentage points, producing a third straight quarter of M2 velocity decline. Still, the projected M2 growth remains below that forecast by the staff's econometric model, but, at less than a percentage point, the model overprediction would be considerably smaller than in the last three quarters. Some lessening of concerns about the soundness of depositories and the virtual cessation of RTC activity and associated disruptions to deposit flows may be the main factors behind the closer alignment of second-quarter M2 growth with historical patterns. (11) The growth of M3 under alternative B is seen as picking up to a 3 percent average pace in May and June, lifting its March-to-June 6. Depositor confidence, however, might again erode should proposals to limit deposit insurance progress through Congress, or should bank failures pick up. In the event of losses to uninsured depositors, any effect of these failures on M3 could be amplified. -12- rate of change to 2 percent. In addition to heavier projected inflows to M2 deposits, rapid issuance of Yankee CDs seems to be resuming. Further- more, the paydown by domestic banks of large time deposits, which was especially pronounced in April, should abate over May and June. Under- lying depository financing needs should increase as a turnaround in lending to businesses and households produces some expansion in bank credit in the last two months of the quarter. Nevertheless, growth in overall private nonfinancial debt is expected to remain quite damped, in line with sluggish spending and reflecting the effects of continuing restraint on credit availability and still-elevated loan rates at depository institutions. In the federal sector, debt growth is expected to surge over the balance of the second quarter, in part to fund enlarged RTC payouts. Even so, total domestic nonfinancial debt is projected to grow at only a 4-1/2 percent rate from March to June, putting expansion from its fourth-quarter base close to the lower bound of the aggregate's monitoring range. (12) The current structure of interest rates appears to embody market expectations of no further monetary policy move in the near term, so implementation of alternative B is unlikely to engender any immediate reaction in domestic financial or foreign exchange markets. Over the intermeeting period, market participants no doubt will encounter mixed evidence about the outlook, as is typical in a period near a turning 7. The likely gearing up of RTC activity as the quarter comes to a close will shift assets and associated funding needs from thrifts to the federal government and will accelerate the decline of large time deposits at thrifts, but the pickup is coming so late in the quarter that the effects on monthly M3 will not be felt until July. -13- point. With expectations somewhat fragile, there may be frequent adjust- ments to financial asset prices in the face of these mixed signals. Markets also may be particularly sensitive to clues about the Federal Reserve's policy strategy around the cycle trough; the unchanged policy stance of alternative B--if maintained through the intermeeting period in the absence of clear evidence of a trough--could be seen as incorporating a more cautious policy approach to assuring an upturn. (13) Because the immediate 1/2 percentage point drop in the federal funds rate under alternative A would come as a surprise to financial market participants, most of it would be passed through to other short-term market interest rates, and the prime rate likely would be reduced again. Bond yields are likely to decline in response, especially if this action were seen as signalling the Federal Reserve's assessment that the economic situation was worsening or price pressures were substantially reduced. However, with this easing coming on the heels of the recent discount rate reduction, alternative A would be seen as especially aggressive and could arouse concerns about the expected downward trajectory for inflation unless softness in the economy or prices were confirmed by subsequent data. With quality spreads already having narrowed con- siderably, any further decline in private interest rates relative to Treasury yields is likely to be quite limited. The exchange value of the dollar would tend to adjust downward; this movement would be limited to the extent the upward pressure on foreign currencies, against a backdrop of a general softening in economic performance abroad, occasioned a relaxation of monetary policy in some major trading partners. -14- (14) The lower market rates of alternative A would further en- hance the attractiveness of retail deposits, likely boosting the average growth of M2 in May and June to around a 5-1/2 percent rate, and to 4-1/2 percent from March to June. A lower prime rate, enhanced prospects for a turnaround in output, and stronger prices of real assets would stimulate demands for bank loans. But only a small impetus to bank credit expansion would be given in the near term, partly because business borrowing likely would remain focused on long-term markets, so the effect on M3 through June would not be large. This aggregate's growth over the three months ending in June, projected at a 2-1/4 percent pace, is only 1/4 percentage point faster than under alternative B. For both aggregates, the major effect of lower interest rates under alternative A would occur in the third quarter; with no subsequent change in policy, M2 likely would end up in the upper portion of its range by next fall, and M3 somewhat above the midpoint of its range. -15- Directive Language (15) 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. 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, somewhat (SLIGHTLY) greater reserve restraint (WOULD/MIGHT) or somewhat (SLIGHTLY) lesser reserve restraint (WOULD) might be acceptable in the intermeeting period. The contemplated reserve conditions are expected to be consistent with growth of M2 and M3 over the period from March through June at annual rates of about 5-1/2 and 3-1/2] percent, respectively. ____ AND ____ [DEL: May 10, 1991 SELECTED INTEREST RATES (percent) IShot|l-Tenm I I federal I funds I. 90 - 1t |_IK. _ 3._1 1 |0-.t Am __ & money comm. paper market mutual l 6 1---- I Il loan Iered nlr 7 DankI( prime I--- --a I US governmment constant maturity yields -- i 1 --- al II 10 I 11 recently i B ond Buy off I 12 conventional home morlages secondary I mark 1 13 pmar rary xe-rate IllLu l 1I 14 market I ARM I .I.. 16 8.33 7.16 796 6.54 10.50 10.00 907 794 9.13 8.00 10_50 9.55 7,83 7.28 1099 9.91 1067 956 8.63 Low High Low 7.46 5.69 6.46 548 9.93 8.50 8.21 7.79 8.40 7.97 9.96 9.41 7.40 7.07 9.97 9.52 975 925 7.78 7.23 876 8,48 8.47 875 8.89 8.72 8.39 8.07 8.73 8.46 8.50 8.86 9.03 8.86 8.54 8.24 10.04 9.85 9.96 10.29 10.28 10.23 10.07 9.95 7.59 7.47 7.40 7.57 7.72 7.74 745 7.34 10.68 10.37 10.26 10.41 10.45 10.47 10.25 9.95 1048 1016 1004 1010 10.18 1018 1001 967 8.59 8.50 8.43 809 785 8.11 804 8.27 8.03 8.29 8.21 9.83 9.54 9.58 946 732 7.17 7.32 7.24 9.89 9.63 9.81 9.75 964 937 950 949 7.74 8.08 7.97 7.99 8.09 9.53 9.46 9.53 9.64 7.08 7.07 7.23 7.31 9.60 9.52 9.68 9.85 936 925 929 940 7.68 High 91 2 mnarke mnLMI nthI . .____l3 _ L in- Tern I corporate I A ulflly I munticlpl I I CDs I I secondary Treasury is secondary markel 7.86 Monthly May Jun Jul Aug Sep Oct Nov Dec 90 90 90 90 90 90 90 90 8.18 8.29 8.15 8.13 8.20 8.11 781 7.31 7.74 7.73 7.62 745 7.36 7.17 706 674 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 8.69 Jan Feh Mar Apr 91 91 91 91 6.91 6.25 6.12 5.91 622 594 590 565 9.52 9.05 9.00 9.00 7.38 7.08 Weekly Feb 6 91 Feb 13 91 Feb 20 91 Feb 27 91 6.32 6.29 6.26 6.31 6.01 5.89 5.92 599 9.29 9.00 9.00 9.00 7.09 6.98 7.21 7.89 7.79 7.81 7.93 Mar 6 91 Mar 13 91 Mar 20 91 Mar 27 91 6.47 6.17 6.10 6.10 6.06 5.92 583 586 9.00 9.00 9.00 9.00 7.36 7.31 7.35 7.39 8.09 8.07 8.14 8.13 8.26 8.24 8.33 8.31 9.62 9.54 9.60 9.49 7.30 7.29 7.33 7.35 9.81 9.71 9.84 9.83 949 9.50 959 952 7.51 7.45 744 7.41 Apr 3 91 Apr 10 91 Apr 17 91 Apr 24 91 6.00 5.90 5.69 5.92 5.76 5.66 5.57 5.69 9.00 9.00 9.00 9.00 7.28 7.23 7.19 7.27 8.05 8.02 7.99 8.09 8.24 8.20 8.16 8.24 9.41 9.41 9.49 9.50 7.29 7.27 7.19 7.22 9:67 9.74 9.79 9.79 9.49 9.48 9.47 9.53 7.39 7.39 7.37 7.36 5.92 5.79 5.57 548 8.93 8.50 7.19 8.05 8.03 8.21 8.21 9.42 7.14 7.09 9.73 9.47 7.13 7.23 5.76 5.76 547 5.48 8.50 8.50 8.50 7.16 7.12 8.04 8.02 8.22 8.21 May May 1 91 8 91 Daily May 3 91 May 9 91 May 10 91 I 5.57 5.63 5.74 5.76 5.92 5.92 5.89 5.90 5.92 5.91 8.40 8.26 8.22 8.27 8.07 7.74 7.47 7.35 7.23 7.04 :: 8.35 8.28 821 8.10 7.93 7.65 7 47 738 7.59 7.57 7.53 1- NOTE Weekly data or columrn I hrough 11 are statement week wage DIta a In column tae taken&rm Donoghues Money Fund elpor Columns 12. 13 and 14am I -day quoesoi Friday. Thusdayor Friday respectively folowhing te end of the statement week Counm 13 lsthe Bond Buyer reveril ndex Ctlumin 14 IsMte FNMA puirasd yeld. plus lo secng tee. an 30-dy mandatory devery commwt t Column 15Is the average contrac toae on new commnitmer lo fixed tale maongages(FRMs) with 80 percent loan-to-value ratkos a maimoInstlutlonal lenders Column 16 Is the average Inlitl contac rate on new commitments for 1-year adjustable-tate montgages(ARMs) at malor Institulknal lenders offering both FRMs and ARMs with the same number of discount poits preliminary dala p Strictly Confidential (FR)II Class FOMC Money and Credit Aggregate Measures Seasonally adjusted MAY. Money stock measures and liquid assets Bank credit nontransactions Period M1 M2 components in M2 M3 L total loans and investments in M3 only 13, 1991 Domestic nonfinancial debt1 U.S. government other* total' 9 10 1 2 3 4 5 6 7 4.2 0.6 4.2 5.2 4.7 3.8 5.5 6.1 3.7 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 4.2 3.7 3.4 5.8 3.9 3.0 2.1 3.6 3.8 2.7 1.7 2.8 -9.1 -3.8 -3.5 7.1 1.3 1.6 1.0 4.3 0.9 2.0 1.5 6.4 6.2 2.9 2.7 9.7 14.4 11.4 12.2 6.2 4.9 4.2 2.7 7.0 7.1 6.0 5.0 4.5 -0.3 5.9 -1.2 8.6 7.8 -0.9 3.1 3.1 3.8 1.1 2.9 1.8 5.1 4.4 1.1 0.1 1.9 3.5 1.5 1.8 2.7 4.0 3.2 1.7 -0.9 1.5 -7.1 -4.3 -7.1 -2.1 0.2 -9.7 -3.8 0.5 -1.8 1.6 0.0 0.9 1.0 4.1 1.7 0.1 0.1 1.2 1.4 -4.2 4.8 1.0 2.1 5.4 -0.4 0.5 0.5 6.9 3.2 6.6 5.9 9.8 1.4 2.6 1.3 3.1 7.5 7.5 14.9 13.9 18.9 11.0 5.6 15.5 13.1 6.7 4.5 4.1 5.1 5.2 5.5 4.4 3.2 2.3 6.9 5.2 6.6 7.2 8.4 6.8 4.7 6.2 4.9 1.9 14.1 9.3 -1 1.1 8.7 7.5 3 0.9 6.9 6.9 4 14.7 20.1 -17.4 -11 3.7 10.8 2.7 0 4.9 9.1 -1.0 6.3 6.8 0 10.9 14.4 5.6 2.0 3.2 3.8 4.2 5.9 4.2 823.3 825.4 3324.7 3330.0 2501,4 2504.6 785.3 784.1 4110.0 4114.1 4958.0 4960.0 2716.6 2723.6 2505.4 2532.8 7900.5 7915.7 10405.9 10448.5 826.7 836.4 842.9 3333.1 3357.2 3378.3 2506.4 2520.9 2535.4 793.7 807.0 795.3 4126.9 4164.2 4173.6 4980.3 5018.2 2721.2 2735.1 .2750.9 2555.9 2586.6 2598.6 7929.2 7950.4 7975.7 10485.1 10537.0 10574.2 4 11 18 25 837.7 839.6 839.9 844.2 3366.7 3372.6 3378.9 3385.5 2528.9 2533.0 2539.0 2541.3 804.6 803.8 799.7 788.1 4171.2 4176.4 4178.6 4173.6 1 8 15 22 p 29 p 851.8 841.9 844.2 841.3 840.3 3382.7 3388.2 3390.9 3386.6 3377.9 2530.9 2546.3 2546.7 2545.3 2537.6 782.2 783.8 795.9 790.9 783.1 4164.9 4172.0 4186.8 4177.5 4161.0 ANN. GROWTH RATES ANNUALLY (Q4 TO 1988 1989 1990 1%) 8 : 41) QUARTERLY AVERAGE 1990-2nd 1990-3rd 1990-4th 1991-1st QTR. QTR. QTR. QTR. MONTHLY 1990-APR. MAY JUNE JULY AUG. SEP. OCT. NOV. DEC. 1991-JAN. FEB. MAR. APR. pe LEVELS I*BILLIONS) : MONTHLY 1990-NOV. DEC. 1991-JAN. FEB. MAR. NEEKLY 1991-MAR. APR. 1. 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). Class IIFOMC Components of Money Stock and Related Measures seasonally adjusted unless otherwise noted Small Period Currency Demead depeie __ LEVELS i$BILLIONS) : ANNUALLY (4TH QTR. ) 1988 1989 1990 Other Overnlghl checkabl deposits RP and Eurodollar NSA' 3 4 denomi. MMOAs Savings deposits nftion time deposits' 5 6 1 MAY. Money market mutual funds general Institupurpose lions and braoker only 13, 1991 Large Short- dwrmml- nation time depositsl dealer' 8 0 10 Term fP NSA' 11t Term Eurodollars NSA' Savings bonds 12 t3 Bankers term CommerTreasury clt paper* securitiec 14 Is acceplances 16 210.8 220.9 245.1 267.3 278.9 277.1 280.1 282.9 292.8 83.4 76.1 78.5 505.8 482.0 506.5 424.5 402.9 411.1 1022.4 1142.4 1162.5 237.5 308.9 344.2 86.7 101.4 121.9 538.8 565.0 511,6 123.2 106.6 93.8 102.8 80.2 70.5 108.8 116.8 125.2 266.8 321.5 328.7 326.6 350.4 359.1 40.5 MONTHLY 1990-MAR. 228.4 278.9 289.8 81.9 495.7 410.2 1149.9 325.9 105.2 549.3 98.4 66.7 119.2 336.9 344.1 37.2 APR. MAY JUNE 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 JULY AUG. SEP. 235.7 238.4 241.5 275.6 278.0 279.1 291.7 292.1 293.0 84.0 82.7 81.5 503.4 505.9 507.4 412.7 412.7 412.3 1156.8 1158.3 1160.1 329.2 335.8 339.3 109.8 114.0 116.2 535.0 529.2 521.9 100.5 102.0 98.3 65.1 68.3 70.0 122.2 123.0 123.8 334.3 329.8 333.8 348.2 347.0 359.0 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 74.1 506.7 506.8 505.9 411.5 411.1 410.8 1161.4 1161.8 1164.2 341.8 343.0 347.7 119.6 120.5 125.7 515.1 512.5 507.1 95.6 95.7 90.2 70.2 70.0 71.4 124.5 125.2 126.0 330.4 329.8 325.8 358.8 359.0 359.4 32.6 34.0 34.7 251.6 255.1 256.7 272.9 276.2 277.2 293.9 296.8 300.9 71.7 71.1 505.1 511.4 518.9 412.0 415.5 420.8 1163.2 1162.3 1157.8 356.3 360.5 365.9 130.1 139.3 142.0 511.7 515.8 511.0 88.5 87.6 84.4 72.0 73.0 72.0 126.7 127.8 327.4 I 363.4 334.9 356.2 36.0 35.2 1991-JAN. FEB. MAR. 1. 2. 3. 4. 70.6 40.4 33.8 34.7 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 NET CHANGES IN SYSTEM HOLDINGS OF SECURTES STRICTLY CONFIDENTIAL (FR) CLASS II-FOMC 1 MIMone of dollari, not semaonaey adulkd May 10, 1991 Net change outright Period 7.635 1,468 17.448 2200 5,435 2,176 12,730 4,400 -11.263 13,048 327 1.404 258 425 -100 -3.79 1,400 10.002 5.115 - 10,892 100 150 -5,199 3,000 5,115 2241 -200 -- Q1 2,160 1.000 1.160 2,950 1990 May June 3,365 1,732 287 4.197 3.000 3,365 1,732 287 4.197 631 933 6.658 -5.350 July August September October ovember December 1991 Janury Febuary Much April 631 933 6.858 -2,350 -120 1,967 313 908 1.000 - 9,665 1,315 375 14.513 -10,390 13,240 1,557 -1,683 9.157 200 -4,061 509 95 12614 - 150 - 25 -5.000 10,964 5.045 2.230 4.150 5.310 °_ 5.241 1991 1.398 284 S - 50 - 325 -300 -1,120 1.967 313 906 450 3,700 1,250 -21,810 -378 2146 3.365 1,782 254 4.160 631 809 6.983 -5,651 1,110 -3,878 -1,224 509 13,329 -1,120 2,417 4.013 2,067 -5,800 -1,127 -14,793 1,370 225 381 1,643 -5.39 5,332 3.466 -2,757 2.663 Weekly Febumry 6 Febnuary 13 Febuwy 20 Febuary 27 Much Makch MmIch Mmch 225 381 1,193 6 13 20 27 839 2460 1,061 1,200 1.200 -7,177 9,762 -8.227 Soo 00 1.035 1,273 3.585 -,778 931 '-April 3 April 10 April 17 April 24 1,200 - 600 800 - -- 800 - 5.560 -01 -5.997 - 5.180 -3,263 May 1 May 8 Mamo: LEVEL (il $)7 May 8 25.9 1. Change from andff-peiod to end-of-period. 2 Outgr tranacUons in market and with foreign ccoun. 3. Outright tranactions in market and with foreign accounts. nd aho-tem note acquired in exchng for maturing bills. Exdudes maturtyshlht md rmovem of maturing ibues, 4. Weekly net purchases of Trea6uy coupons e summed aver a mludMit. 61.4 13.8 256.0 24.7 -11.4 5. Relect net change niduptions (-) of Trewuy and agency securti. 6. Include change i R (+), matched selepurchlse tansactons (-), mnd mchd purchase *e bianmscMan (+). 7. The levels o agency sues we as folows: Iy ay 8 1-5 S2.6 2.4 I 5-10 1.0 I or 10 Itol 0.2 I .2 

Federal Reserve (1991, May 13). Bluebook. Bluebooks, Federal Reserve. https://whenthefedspeaks.com/doc/bluebook_19910514

@misc{wtfs_bluebook_19910514,
  author = {Federal Reserve},
  title = {Bluebook},
  year = {1991},
  month = {May},
  howpublished = {Bluebooks, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/bluebook_19910514},
  note = {Retrieved via When the Fed Speaks corpus}
}