Bluebook

Prefatory Note The attached document represents the most complete and accurate version available based on original copies culled from the files of the FOMC Secretariat at the Board of Governors of the Federal Reserve System. This electronic document was created through a comprehensive digitization process which included identifying the bestpreserved paper copies, scanning those copies, 1 and then making the scanned versions text-searchable. 2 Though a stringent quality assurance process was employed, some imperfections may remain. Please note that this document may contain occasional gaps in the text. These gaps are the result of a redaction process that removed information obtained on a confidential basis. All redacted passages are exempt from disclosure under applicable provisions of the Freedom of Information Act. 1 In some cases, original copies needed to be photocopied before being scanned into electronic format. 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Please note that the numbers and text in charts and tables were not reliably recognized by the OCR process and were not checked or corrected by staff. November 1, Strictly Confidential (FR) 1991 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 November 1, 1991 MONETARY POLICY ALTERNATIVES Recent Developments (1) Over most of the interval since the October FOMC meeting, the Desk sought to maintain existing reserve market pressures. The allowance for adjustment plus seasonal borrowing initially was kept at $325 million but over the first two complete maintenance periods it was reduced in three technical adjustments of $25 million each to allow for the declining trend of seasonal borrowing.1 The federal funds rate averaged near the 5-1/4 percent level expected by the FOMC through the first maintenance period and most of the second, before drifting off late in that period, reflecting market anticipation of an imminent policy easing that was reinforced when a need to drain reserves was deliberately not met on settlement day in the context of an ongoing Committee consultation. In response to signs of flagging consumer and business confidence and a weaker-than-expected economic recovery, reviewed at that consultation, the borrowing allowance was reduced by $25 million on Thursday, the first day of the current period. Consistent with this change, the expected trading area for federal funds was lowered to 5 percent, where the federal funds rate settled late in the week. Also on Thursday, another tech- nical reduction of $50 million was made in the borrowing allowance, bringing the current allowance to $175 million. (2) Over the first three weeks of the intermeeting period, short-term market interest rates declined somewhat, as market participants interpreted incoming data as generally pointing to continued 1. In the first complete maintenance period, borrowing averaged $283 million, close to the allowance of $275 million, while in the second period, borrowing averaged $211 million, compared with a $250 million allowance. economic sluggishness. Long-term market rates, by contrast, backed up considerably over these weeks as data on consumer prices proved disappointing, oil prices firmed, and discussions of possible fiscal stimulus measures prompted renewed concerns about federal deficits and borrowing. Subsequently, both short- and long-term rates moved down appreciably in reaction to information suggesting additional economic weakness, more favorable labor cost and GNP price data, and the renewed anticipation of further monetary policy easing. Since the last FOMC meeting, short rates are down 35 to 45 basis points. prime rate, however, remained at 8 percent. The Rates on Treasury notes also declined, but at the longest maturity, bond rates were up on balance by around 10 basis points. Primary-market yields on mortgages fell to their lowest levels since 1977, spurring mortgage refinancings. Although some stock price indexes touched record highs during the intermeeting period, most indexes were up only a little on net. (3) The dollar's foreign exchange value on a weighted aver- age basis is down about 1 percent on balance since the last Committee meeting. The dollar was generally higher over the first half of the intermeeting period but was weakened significantly by the stream of negative reports on the U.S. economy and by the anticipated U.S. policy easing. The yen was especially strong, bolstered by increasing market focus on Japan's burgeoning external surpluses and possible implications for Japanese policy. Three-month interest rates in Japan declined about as much as U.S. rates, while German short-term rates rose by 15 basis points. Long-term rates in both Germany and Japan were little changed over the period. --------------------------- -- -------- ----------------- -------------- ------------ ------ ----- -------; the Desk did not intervene. (4) M2 and M3 resumed modest expansion in October, at rates of 3 and 1 percent, respectively, which were close to their 3 and economic sluggishness. Long-term market rates, by contrast, backed up considerably over these weeks as data on consumer prices proved disappointing, oil prices firmed, and discussions of possible fiscal stimulus measures prompted renewed concerns about federal deficits and borrowing. Subsequently, both short- and long-term rates moved down appreciably in reaction to information suggesting additional economic weakness, more favorable labor cost and GNP price data, and the renewed anticipation of further monetary policy easing. Since the last FOMC meeting, short rates are down 35 to 45 basis points. prime rate, however, remained at 8 percent. The Rates on Treasury notes also declined, but at the longest maturity, bond rates were up on balance by around 10 basis points. Primary-market yields on mortgages fell to their lowest levels since 1977, spurring mortgage refinancings. Although some stock price indexes touched record highs during the intermeeting period, most indexes were up only a little on net. (3) The dollar's foreign exchange value on a weighted aver- age basis is down about 1 percent on balance since the last Committee meeting. The dollar was generally higher over the first half of the intermeeting period but was weakened significantly by the stream of negative reports on the U.S. economy and by the anticipated U.S. policy easing. The yen was especially strong, bolstered by increasing market focus on Japan's burgeoning external surpluses and possible implications for Japanese policy. Three-month interest rates in Japan declined about as much as U.S. rates, while German short-term rates rose by 15 basis points. Long-term rates in both Germany and Japan were little changed over the period. the Desk did not intervene. (4) M2 and M3 resumed modest expansion in October, at rates of 3 and 1 percent, respectively, which were close to their 3 and at a time of declining money-market yields. In addition, bank liabili- ties within M3 expanded more rapidly to fund faster growth of bank credit. (6) Most of the step-up in bank credit in October reflected a pickup in securities acquisitions, although the contraction in total loans also slowed. C&I loans expanded for the second consecutive month, but at a much reduced rate. A recent survey of bank loan officers pro- vided little evidence of a further tightening of business loan standards and instead suggested that such loans continued to be held down by weak demand. Firms with access to capital markets maintained their reliance on proceeds of bond and equity issuance, reflecting the reduced financing costs on such instruments as well as firms' efforts to strengthen balance sheets. Offerings of tax-exempt bonds also continued at a rapid clip in October, in part as a number of governmental units resorted to extraordinary measures to finance budgetary shortfalls. The very limited avail- able data pertaining to household-sector borrowing in October suggest little buoyancy. Consumer loans at banks, adjusted for securitization, contracted for the second month in a row, even though no surveyed loan officers reported less willingness to extend consumer loans and some reported more. The pickup in mortgage refinancing activity has not translated into much of a boost to mortgage borrowing, as homeowners appear to be motivated more by lowering interest costs than by extracting equity. Underlying the continued light borrowing by nonfederal sectors has been the slow pace of income growth as well as the tendency of households and businesses to deleverage balance sheets. Federal borrowing in October stayed heavy, however, despite a marked slowdown in deposit insurance outlays. Total domestic nonfinancial sector debt in October likely edged further above the 4-1/2 percent lower limit of its monitoring range. -5- MONEY, CREDIT, AND RESERVE AGGREGATES (Seasonally adjusted annual rates of growth) QIV'90 pe Oct. to pe Oct. Aug. Sept. Ml 9.4 5.5 12.4 7.4 M2 0.2 0.0 3.0 2.5 M3 -0.8 -2.2 1.1 0.9 6.5 7.0 -- 4.71 -0.7 3.2 6.1 2.6 Nonborrowed reserves 2 14.2 9.5 18.4 8.1 Total reserves 11.7 6.6 16.1 8.0 9.2 6.5 9.9 8.4 borrowing 464 344 251 Excess reserves 1086 929 1093 Money and credit aggregates Domestic nonfinancial debt Bank credit Reserve measures Monetary base Memo: (Millions of dollars) Adjustment plus seasonal pe--preliminary estimate. 1. QIV'90 to September. 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. Policy Alternatives (7) Two alternatives are presented below for consideration by the Committee. Under alternative B, federal funds would continue to trade around 5 percent in combination with adjustment plus seasonal borrowing of $175 million.3 Under alternative A, the federal funds rate would move down to 4-1/2 percent, achieved either through a 1/2 percentage point cut in the discount rate with the same level of borrowing as under alternative B or through open market operations that lowered the borrowing level to $125 million. In the latter case, the decline in the funds rate to 1/2 percentage point below the discount rate would cause borrowing to fall to frictional levels. A bit more volatility in the federal funds rate would be implied as the discount window becomes a little less effective buffer to disturbances in the reserves market. (8) Monetary growth rates under the two alternatives are presented in the table below. (More detailed information is shown in the table and charts on the following pages.) Under both alternatives M2 would finish the year at or a shade above, and M3 a touch below, the lower bounds of their ranges. As discussed in previous bluebooks, growth in the broader aggregates this year is being unusually depressed by the downsizing of the thrift industry, weak lending by commercial banks, portfolio shifts by the public into capital market instruments, and the process of deleveraging by households and businesses. Slow expansion this year in M2 and M3, combined with the staff's forecast of 3-1/2 percent annual growth for nominal GNP, 3. Reflecting a further unwinding of seasonal borrowing demands over the remainder of the autumn, additional technical reductions to the borrowing allowance may be needed over the intermeeting period. -7- implies increases in their velocities this year, despite the large declines in short-term market interest rates and related opportunity costs. M1 evidently has responded to the reduction in its opportunity costs much more in line with historical patterns, although some of the strength in M1 this year has come from a continuation of unusually heavy demands for currency aboard. Narrow money is expected to grow by at least 7-1/2 percent this year, well in excess of nominal income. Alt. A Alt. B Growth from September to December M2 M3 M1 3-1/2 1-1/4 10 3 1 9 M2 2-3/4 2-1/2 M3 1 1 M1 7-3/4 7-1/2 Implied growth from 1990:Q4 to December (9) The markets appear to have built in a high probability of a further easing move in the period just ahead, and thus with the unchanged funds rate of alternative B, other market interest rates may tend to firm. The reversal in yields would be modest should incoming data on the real economy point more decisively to faltering near-term expansion, as in the staff forecast, engendering the expectation that the next easing has only been postponed. Any rise in long-term yields also would be mitigated to the extent that indications of a softening in the economic outlook were seen as improving prospects for disinflation. However, quality spreads on bank and corporate debt would widen marginally if the market's economic outlook turns more downbeat. rates do firm a little, the dollar could rise a bit on foreign exchange markets. If Alternative Levels and Growth Rates for Key Monetary Aggregates M2 M3 M1 Alt. A Alt. B Alt. A Alt. B Alt. A Alt. B 3391.8 3392.6 3392.5 3391.8 3392.6 3392.5 4149.4 4146.8 4139.3 4149.4 4146.8 4139.3 859.6 866.3 870.3 859.6 866.3 870.3 October November 3401.0 3410.9 3401.0 3409.5 4143.1 4147.2 4143.1 4146.5 879.3 885.2 879.3 884.4 December 3422.3 3418.0 4151.4 4150.0 892.1 889.9 -3.6 0.3 -0.1 -3.6 0.3 -0.1 -5.0 -0.8 -2.2 -5.0 -0.8 -2.2 1.7 9.4 5.5 1.7 9.4 5.5 3.0 3.5 4.0 3.0 3.0 3.0 1.1 1.2 1.2 1.1 1.0 1.0 12.4 8.0 9.5 12.4 7.0 7.5 Quarterly Ave. Growth Rates 1990 Q4 1991 Q1 Q2 Q3 Q4 2.0 3.4 4.8 -0.3 2.3 2.0 3.4 4.8 -0.3 2.0 0.9 4.0 1.9 -2.4 0.2 0.9 4.0 1.9 -2.4 0.1 3.4 5.9 7.3 6.9 9.3 3.4 5.9 7.3 6.9 8.9 Jun 91 to Sept 91 Sept 91 to Dec 91 -1.1 3.5 -1.1 3.0 -2.6 1.2 -2.6 1.0 5.5 10.0 5.5 9.0 4.1 2.7 2.6 2.5 2.7 4.1 2.7 2.5 2.5 2.6 3.0 1.1 0.9 0.9 0.9 3.0 1.1 0.9 0.9 0.9 6.7 6.8 7.6 7.4 7.7 6.7 6.8 7.4 7.4 7.5 Levels in billions 1991 July August September Monthly Growth Rates 1991 July August September October November December Q4 Q4 Q4 Q4 Q4 90 90 90 90 90 to to to to to Q2 91 Q3 91 Q4 91 Oct 91 Dec 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 * Short-Run Alternatives 3550 6.5% 3500 3450 - 2.5% -1 3400 ^ <r 3350 J 4 3300 I O III D N 1990 I I J F I I I I M I I I A M I J J 1991 I I I I. I A S I 0 I N I D J 1992 3250 Chart 2 ACTUAL AND TARGETED M3 Billions of dollars 4350 Actual Level * Short-Run Alternatives 4300 4250 4200 4150 1% c c 4100 4050 4000 O N D 1990 J F M A M J J 1991 A S O N D J 1992 Chart 3 M1 Billions of dollars Actual Level ------Growth From Fourth Quarter * Short-Run Alternatives 910 ,' 10% - , ,890 - I1 I I B - 870 890 II I If 830 -I- I I I ' r-I - -' - 0% O D N 1990 J F M A M J A J 1991 S O N D J 1992 Chart 4 DEBT Billions of dollars 11400 S Actual Level SProjected Level 11200 I V I 11000 ^ ^ ^ <r 10800 f I 10600 10400 10200 O N 1990 D J F M. A M J J 1991 A S O N D J 1992 (10) M2 would be expected to continue to expand at a 3 percent rate in the November and December period under alternative B, the same as expected at the October FOMC meeting. The negative impact on M2 of the weaker picture for income and spending growth is likely to be about offset by the effects on opportunity costs of the most recent policy easing and by what promises to be a larger than previously expected slowdown in RTC resolution activity in the fourth quarter. In October, resolutions fell to a much reduced level that now seems likely to persist through year-end owing to legislative delays, which largely removes one restraining influence on retail deposits. Growth of demand deposits, however, is expected to fall back from October's atypical surge and show through to a slowing in M1 growth to a 7-1/4 percent pace over November and December.4 In the fourth quarter of this year, M2 expansion at a 2 percent rate on a quarterly average basis would imply a rise in its velocity of 1-1/2 percent at an annual rate, down markedly from the 4-1/2 percent pace of the third quarter. Under this policy alternative, M2 would be on a trajectory to enter 1992 only a bit above the lower end of its tentative 1992 growth range of 2-1/2 to 6-1/2 percent. (11) M3 under alternative B is seen as continuing to grow at a 1 percent annual rate over November and December, which would mean this aggregate would be entering next year around the bottom of its tentative 1992 range of 1 to 5 percent. Despite the reduced projection for RTC activity, growth of M3 over the rest of the year is likely to be a little slower than expected at the last FOMC meeting. The weaker outlook for M3 stems from our anticipation that the 4. Total reserves, currency, and the monetary base all are expected to grow at rates of 8 to 9 percent over the last two months of the year. -10substitution of non-M3 liabilities for Yankee CDs at branches and agencies of foreign banks surfacing in October probably will persist to some degree. Projected weakness in bank credit continues to damp the outlook for M3. Growth of C&I loans will be anemic owing to continued restraint by banks and, more important, to weak demand. Business outlays for fixed capital and inventories are likely to be soft, and offerings in bond and equity markets should remain robust, as those firms that can access these markets seek to strengthen balance sheets. Lending for commercial properties will remain depressed by sustained difficulties in this sector. Household mort- gage growth will be restrained by the modest recovery in housing activity envisioned in the staff forecast. Consumer credit should contract further over the remainder of the year, largely reflecting subdued spending on durables. In the aggregate, borrowing of domestic nonfederal sectors is expected to remain sluggish through year-end. In contrast, federal borrowing will stay brisk to finance a burgeoning deficit. Overall debt of domestic nonfinancial sectors is expected to register a 5 percent rate of expansion over the September-to-December period, placing growth for the year about 1/2 percentage point above the bottom of the FOMC's 4-1/2 to 8-1/2 percent monitoring range for this aggregate. (12) The easing contemplated in alternative A exceeds that now envisioned by the markets and thus money market interest rates would decline, perhaps by at least 1/4 percentage point. Long-term rates, too, would come under some downward pressure, although declines would be muted if earlier market concerns about the stickiness of inflation reemerge at some point. The prime rate probably would be lowered 1/2 percentage point, still preserving the recently widened spread over funding costs. foreign exchange markets. The dollar likely would fall somewhat on -11- (13) M2 is projected to strengthen to a 4 percent rate by December under alternative A and would be entering the new year well into its tentative range. Enlarged inflows to liquid deposits would boost both its nontransactions and M1 components, as sluggish deposit rates contribute to the attractiveness of such accounts. Tending to limit the pickup in M2, though, would be declines in rates on retail CDs and money funds in relation to expected returns on capital market instruments; also, cost pressures might induce more banks to overcome their hesitancy to lower rates on passbook and NOW accounts, which could prompt established customers to reconsider investment options and move account balances to market instruments. (14) Under alternative A, M3 would expand at a 1-1/4 percent rate in November and December, on a trajectory to begin the new year within its tentative range. Buoying M3 would be heightened inflows to institution-only money market funds, whose holders would respond to the temporary improvement in their yields relative to those of money market instruments. In addition, banks' needs for M3 liabilities would be raised by a little additional lending. Improvement in some lending margins and firmer asset values would enhance access of many banks to capital and funding markets and encourage lending to some previously marginal credits. Nevertheless, the major credit-market beneficiaries of the easing would continue to be those more highly rated credits having ready access to the commercial paper and capital markets. -12- Directive Language: (15) Draft language for the operational paragraph, including the usual options, is presented 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, slightly (SOMEWHAT) greater reserve restraint might (WOULD) or slightly (SOMEWHAT) lesser reserve restraint intermeeting period. (MIGHT) would be acceptable in the The contemplated reserve conditions are expected to be consistent with growth of M2 and M3 over the period from September through December at annual rates [DEL: 3 and 1-1/2]percent, AND ____ of about ____ respectively. November 4, 1991 SELECTED INTEREST RATES (percent) Short-Term federal funds Treasury bills secondary market 3-month I 6-month I CDs secondary market comm. paper money market mutual bank prime U.S. government constant maturty yields Long-Term corporate conventional home mortgages A-utlity municpal secondary pnmary recently Bond market market 1-year 3-month 1-month fund loan 3-year 10-year 30-year offered Buyer fied-rate fixed-rate 1 ARM 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 90 -High - Low 8.33 7.16 7.96 6.54 8.00 6.60 7.97 6.51 8.58 7.63 8.60 7.80 8.06 7.16 10.50 10.00 9.09 7.42 9.07 7.94 9.13 8.00 10.50 9.55 7.83 7.28 10.99 9.91 10.67 9.56 8.63 7.86 91 7.46 5.10 6.46 4.92 6.49 4.97 6.43 4.97 7.75 5.30 8.49 5.26 7.37 4.97 9.93 8.00 7.47 6.21 8.35 7.44 8.52 7.83 9.96 8.93 7.40 6.86 9.97 8.86 9.75 8.78 7.78 6.58 90 90 7.81 7.31 7.06 6.74 7.03 6.70 6.85 6.61 8.03 7.82 7.84 8.28 7.34 7.20 10.00 10.00 7.74 7.47 8.39 8.07 8.54 8.24 10.07 9.95 7.45 7.34 10.25 9.95 10.01 9.67 8.10 7.93 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Weekly Jul Jul Jul 91 91 91 91 91 91 91 91 91 91 6.91 6.25 6.12 5.91 5.78 5.90 5.82 5.66 5.45 5.21 6.22 5.94 5.90 5.65 5.46 5.57 5.58 5.33 5.21 4.99 6.28 5.93 5.92 5.71 5.61 5.75 5.70 5.39 5.25 5.04 6.25 5.91 6.00 5.85 5.76 5.96 5.91 5.45 5.26 5.04 7.17 6.52 6.45 6.06 5.91 6.07 5.98 5.65 5.47 5.33 7.12 6.53 6.48 6.08 5.91 6.06 5.98 5.72 5.57 5.29 6.92 6.10 6.12 5.89 5.60 5.49 5.46 5.38 5.24 5.03 9.52 9.05 9.00 9.00 8.50 8.50 8.50 8.50 8.20 8.00 7.38 7.08 7.35 7.23 7.12 7.39 7.38 6.80 6.50 6.23 8.09 7.85 8.11 8.04 8.07 8.28 8.27 7.90 7.65 7.53 8.27 8.03 8.29 8.21 8.27 8.47 8.45 8.14 7.95 7.93 9.83 9.54 9.58 9.46 9.45 9.53 9.55 9.25 9.05 9.02 7.32 7.17 7.32 7.24 7.13 7.30 7.18 7.05 6.97 9.89 9.63 9.81 9.75 9.73 9.93 9.79 9.44 9.18 9.04 9.64 9.37 9.50 9.49 9.47 9.62 9.57 9.24 9.01 8.86 7.74 7.65 7.47 7.38 7.22 7.24 7.23 7.08 6.87 6.71 17 91 24 91 31 91 5.85 5.75 5.79 5.58 5.58 5.56 5.71 5.73 5.69 5.90 5.91 5.85 5.97 5.97 5.92 5.98 5.94 5.92 5.47 5.46 5.44 8.50 8.50 8.50 7.38 7.38 7.27 8.28 8.28 8.20 8.46 8.48 8.38 9.61 9.53 9.35 7.17 7.13 7.10 9.74 9.70 9.57 9.54 9.50 9.44 7.23 7.21 7.22 Aug Aug Aug Aug 7 14 21 28 91 91 91 91 5.83 5.62 5.68 5.58 5.46 5.32 5.21 5.36 5.54 5.39 5.25 5.40 5.66 5.45 5.27 5.43 5.80 5.63 5.57 5.64 5.83 5.68 5.65 5.71 5.44 5.40 5.35 5.31 8.50 8.50 8.50 8.50 7.03 6.84 6.66 6.73 8.04 7.93 7.82 7.86 8.24 8.18 8.09 8.11 9.30 9.18 9.24 9.17 7.07 7.03 7.03 7.00 9.46 9.40 9.38 9.38 9.27 9.19 9.17 9.15 7.14 7.05 7.03 6.96 Sep Sep Sep Sep 4 11 18 25 91 91 91 91 5.60 5.56 5.44 5.29 5.32 5.28 5.19 5.19 5.35 5.30 5.22 5.24 5.38 5.32 5.24 5.24 5.60 5.55 5.42 5.40 5.73 5.65 5.51 5.49 5.26 5.26 5.21 5.18 8.50 8.50 8.07 8.00 6.65 6.61 6.50 6.43 7.80 7.76 7.64 7.57 8.04 8.03 7.94 7.90 9.11 9.04 9.01 8.96 7.02 7.00 6.95 6.91 9.33 9.18 9.11 9.09 9.14 9.02 8.95 8.92 6.93 6.87 6.83 6.83 Oct Oct Oct Oct Oct 2 9 16 23 30 91 91 91 91 91 5.33 5.19 5.28 5.24 5.10 5.11 5.02 4.99 5.04 4.92 5.14 5.08 5.03 5.09 4.97 5.13 5.07 5.03 5.11 4.97 5.46 5.34 5.30 5.34 5.30 5.50 5.31 5.26 5.28 5.26 5.16 5.08 5.02 5.02 4.97 8.00 8.00 8.00 8.00 8.00 6.30 621 6.22 6.29 6.21 7.49 7.44 7.50 7.61 7.59 7.84 7.83 7.91 8.04 7.98 8.93 9.02 9.04 9.12 8.98 6.87 6.90 6.91 6.93 6.86 9.03 9.02 9.02 9.11 8.86 8.87 8.82 8.82 8.91 8.78 6.74 6.74 6.71 6.66 6.58 5.21 5.23 5.05p 4.96 4.82 4.75 5.03 4.83 4.78 5.03 4.83 4.77 5.32 5.17 5.03 5.27 5.12 5.06 8.00 8.00 8.00 6.28 6.06 6.02 7.68 7.47 7.48 8.05 7.91 7.93 - High - Low Monthly Nov Dec Daily Oct Oct Nov 25 91 31 91 1 91 NOTE: Weekly data for columns 1 through 11 are statement week averages. Data in column 7 are taken from Donoghue's Money Fund Report. Columns 12,13 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 delivery commitments. Column 15 is the average contract rate on new commitments for fixed-rate mortgages (FRMs) with 80 percent loan-to-value ratios at major institutional lenders. Column 16 is the average initial contract rate on new commitments for 1-year, adjustablerate mortgages (ARMs) at major institutional lenders offering both FRMs and ARMs with the same number of discount points. p - preliminary data Strictly Confidential (FR)II FOMC Class Money and Credit Aggregate Measures Seasonally adjusted NOV. nontransactions Ml Period components M2 in M2 7 5 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 1990-4th QTR. 3.4 2.0 1.6 -3.6 1991-1st QTR. 1991-2nd QTR. 5.9 7.3 3.5 4.8 2.7 4.0 6.5 -10.5 1991-3rd QTR. 6.9 -0.3 -2.7 -12.0 -2.4 -0.9 3.1 1.0 -0.3 1.7 -1.3 -4.0 0.5 0.1 -0.1 -0.1 1.3 3.1 1.5 1.0 -2.1 0.8 1.9 14.1 1.3 8.4 1.1 6.6 14.4 18.8 9.5 -1.3 7.4 3.0 6.7 4.4 -18.2 -9.2 -15.7 -18.4 -11.5 -5.2 0.7 -2.0 -5.0 -0.8 DEC. 1991-JAN.. FEB. MAR. APR. MAY JUNE JULY AUG. SEP. OCT. pe LEVELS (SBILLIONS) WEEKLY 1991-SEP. OCT. other' 9 total' __10 18 7.2 4.8 1.9 7.7 7.5 5.4 8.0 7.5 11.0 9.5 7.8 5.3 9.2 7.7 6.7 0.9 1.8 2.9 11.6 3.8 5.7 4.0 1.9 3.2 -2.4 2.7 2.7 11.9 5.7 2.1 3.0 4.5 3.7 2.6 1.3 5.8 16.2 4.0 2.8 4.5 6.0 1.5 3.1 12.9 1.6 4.3 3.8 10.4 4.0 6.5 -1.0 6.3 10.2 14.3 1.1 3.1 3.3 5.8 2.5 0.7 -0.1 -7.9 6.7 0.1 5.4 -3.2 3.3 3.0 3.8 1.5 2613.7 2646.1 2672.1 2708.0 7989.4 8002.6 8016.5 8030.9 13.5 9.6 1.7 9.4 4.6 1.7 -3.6 0.3 1.6 -0.8 -5.4 -2.8 5.5 -0.0 -2.0 -11.6 -2.2 3 0 -8 1 12 1.4 -5.1 5.8 1.0 -1.7 -0.6 5.5 0.0 -0.7 10.5 14.9 11.8 16.1 3.1 2.0 2.1 2.2 4.9 5.1 4.5 5.6 3.2 : MONTHLY 1991-MAY JUNE JULY AUG. SEP. 1. 8 4 MONTHLY 1990-OCT. NOV. government' and investments 3 QUARTERLY AVERAGE U.S. L 2 S_ ANN. GROWTH RATES (%) : ANNUALLY (Q4 TO Q4) 1988 1989 1990 total loans M3 in M3 only 1991 Domestic nonfinancial debt' Bank credit Money stock measures and liquid assets 4, 851.6 858.4 859.6 866.3 870.3 3397.2 3402.1 3391.8 3392.6 3392.5 2545.5 2543.7 2532.2 2526.3 2522.1 776.7 764.8 757.5 754.2 746.9 4173.9 4166.9 4149.4 4146.8 4139.3 2 9 16 23 30 867.0 867.2 869.6 870.8 875.1 3388.9 3392.3 3396.2 3393.3 3388.9 2522.0 2525.1 2526.6 2522.5 2513.9 751.8 748.1 749.5 744.6 744.1 4140.7 4140.4 4145.7 4137.8 4133.0 7 14 p 21 p 876.1 873.0 882.6 3394.1 3397.3 3406.1 2518.0 2524.3 2523.5 744.1 743.7 742.0 4138.3 4141.0 4148.1 4956.3 4980.4 4984.4 4977.3 2750.5 2763.2 2763.3 2761.6 2768.9 10603.1 10648.6 10688.6 10738.9 Debt data are on a monthly average basis, derived by averaging end-of-month levels of adjacent months, and have been adjusted to remove discontinuities. p-preliminary pe-preliminary estimate Strictly Confidential (FR). II Components of Money Stock and Related Measures Class FOMC seasonally adjusted unless otherwise noted Period Currency Demand deposits Other Overnight checkable deposits RPs and Eurodollars Savings deposits' NSA' _ LEVELS ($BILLIONS) : ANNUALLY (4TH QTR.) 1988 1989 1990 2 3 4 5 NOV. Small Money market Large denomi- mutual funds denomi- nation time general purpose Institutions Short. nation time Term RPs Term Eurodollars NSA' 11 deposits' and broker/ only deposits' NSA' 6 dealer 7 8 9 10 Savings bonds term Treasury 4, 1991 Bankers Commercial paper' acceptances 14 15 securities 12 13 210.8 220.9 245.1 287.3 278.9 277.1 280.1 282.9 292.8 83.4 76.1 79.0 930.3 884.9 917.6 1022.4 1142.4 1162.5 237.5 308.9 343.0 86.7 101.4 121.9 538.8 565.0 511.6 123.2 106.6 93.3 102.8 80.2 70.5 108.8 116.8 125.2 266.8 321.5 333.2 326.6 350.4 359.1 40.5 40.4 33.8 MONTHLY 1990-SEP. 241.5 279.1 293.0 81.8 919.6 1160.1 339.3 116.2 521.9 98.0 70.0 123.8 332.2 359.0 31.8 OCT. 243.9 277.1 291.8 84.0 918.2 1161.4 341.6 119.6 515.1 95.2 70.2 124.5 330.3 358.8 NOV. 245.0 277.2 292.8 78.2 917.8 1161.8 341.9 120.5 512.5 95.2 70.0 125.2 333.8 359.0 34.0 DEC. 246.4 276.9 293.8 74.7 916.7 1164.2 345.4 12S.7 507.1 89.6 71.4 126.0 335.4 359.4 34.7 1991-JAN. 251.6 272.9 293.9 72.0 917.1 1163.9 353.9 130.1 511.9 87.5 71.9 126.7 333.2 363.2 36.0 FEB. 255.1 276.1 296.9 71.0 926.9 1162.7 358.2 139.3 516.0 86.0 72.6 127.8 331.4 355.9 35.2 MAR.- 256.7 277.1 301.0 70.1 939.7 1158.3 363.6 142.0 511.5 82.3 71.1 128.9 327.8 352.0 32.4 APR. 256.6 275.8 301.9 70.8 953.8 1150.2 364.2 145.6 507.3 81.1 68.2 130.1 307.6 337.6 30.7 MAY 256.8 278.7 308.1 69.7 969.2 1140.5 365.1 146.2 503.9 79.8 65.4 131.4 299.6 322.7 28.8 JUNE 257.6 281.0 312.0 69.3 981.0 1129.1 364.3 143.3 498.8 77.3 64.8 132.5 327.0 326.4 27.7 JULY 258.9 278.9 314.1 66.6 990.0 1118.6 359.4 141.8 491.1 78.5 65.0 133.5 337.6 336.2 27.8 AUG. 260.8 279.9 318.0 69.6 996.2 1110.3 352.8 144.8 484.5 78.6 65.4 134.4 336.5 332.5 27.0 SEP. 1. 2. 3. 4. 5. 32.6 262.4 279.4 320.8 68.6 1002.7 1102.3 349.2 149.3 475.8 77.5 63.3 Net of money market mutual fund holdings of these items. Includes money market deposit accounts. 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 (FR) STRICTLY CONFIDENTIAL 1 NET CHANGES IN SYSTEM HOLDINGS OF SECURITES Millions of dollars, not easonally adjusted November 1, 1991 CLASS II-FOMC Not change outright holdings total 4 Period 1991 -- Q1 --Q2 --03 1990 October November December 1991 January February March April May June July August September Weekly August August August August 7 14 21 28 September 4 September 11 September 18 September 25 9,665 1,315 375 14,513 -10,390 13,240 1,557 -1,683 11.128 100 150 200 150 -5,000 10,964 5.045 325 -200 25 2,230 -4,061 509 -2,124 16,805 800 2,950 550 650 4,150 1,450 1,815 5,310 5,715 9,419 -16,964 992 152 899 6,983 -5,651 2,457 509 13,839 -1,120 2417 4,013 2,067 3,611 37 1,929 6,116 1,374 -944 -1,127 -14,793 1,370 -1,153 775 71 -2,134 2,216 334 558 1,060 406 3,541 -5.781 3,627 -1.679 4,093 185 829 25 10,301 -11.492 15,116 -15,745 7,635 1,468 17,448 2,200 12.730 4,400 5,435 -11,263 13,048 2,176 327 425 4,685 946 50 -3,799 10,802 5,115 5,241 1,400 3,000 -5,199 10,802 5,115 2241 100 2,{60 4,356 7,664 1,000 - 1,160 4,356 7,664 3,000 933 6,658 -5,350 933 6,658 -2,350 -120 1.967 313 908 3.411 37 1,359 5,776 529 1,000 900 1,165 1,404 258 -100 1,398 284 - 325 -200 -1,120 1,967 313 908 3,411 37 1.359 5,776 529 100 700 700 200 625 340 200 184 468 960 406 450 3,700 1,250 200 2.950 550 625 340 850 650 150 90 100 150 90 100 200 175 650 25 4,093 15 179 5 Net RPs October 2 - 1,027 -2,429 October 23 -3 -10 6.347 -5,179 October 30 - October 9 October 16 Memo: LEVEL (bil. $) 6 October 30 132.9 31.1 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 bils. Excludes maturity shifts and rollovers of maturing issues. 60.7 14.0 130.0 24.2 914 269.0 4. Reflects net change in 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 folows: -----October 30 1 year 2.3 1-5 2.6 5-10 1.0 over10 0.2 -5.8 I total 6.1 

Federal Reserve (1991, November 4). Bluebook. Bluebooks, Federal Reserve. https://whenthefedspeaks.com/doc/bluebook_19911105

@misc{wtfs_bluebook_19911105,
  author = {Federal Reserve},
  title = {Bluebook},
  year = {1991},
  month = {Nov},
  howpublished = {Bluebooks, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/bluebook_19911105},
  note = {Retrieved via When the Fed Speaks corpus}
}