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 March 27, 1992 MONETARY POLICY ALTERNATIVES Recent Developments (1) The Federal Reserve's stance in the reserves market remained unchanged over the intermeeting period.1 In the three com- plete maintenance periods since the February FOMC meeting, the federal funds rate averaged 4 percent, and funds have continued to trade mostly at or a little below that level in the current maintenance period. The allowance for adjustment plus seasonal borrowing was raised $25 million to $100 million immediately after the FOMC meeting to reflect an expected rise in seasonal credit and has since remained unchanged. Bor- rowing averaged only $67 million in the three complete maintenance periods and is running at $73 million in the current period; adjustment credit has remained unusually low and seasonal borrowing--subject to a less attractive rate under the new market-based rate program implemented this year--has increased relatively little. (2) Despite the stable federal funds rate, most market inter- est rates rose from 20 to 60 basis points over the intermeeting period, as spending picked up and expectations took hold that a solid economic expansion was underway. 2 Perhaps reflecting the changed cyclical outlook, the most pronounced increases occurred at intermediate maturities, with the three-year Treasury note rate moving around 60 basis points higher versus a 20 basis point rise in the thirty-year bond yield. Currently the yield on thirty-year bonds is about one-half per- centage point above its low in early January, though it remains about 1. On February 18, the Board announced a reduction in the reserve requirement on transaction deposits from 12 to 10 percent, to take effect April 2. This action was designed to free up funds for lending and to strengthen the financial condition of banks, thereby improving their access to capital markets and putting them in a better position to extend credit. 2. Discussions of interest rates, exchange rates, and stock prices are based on data available through noon, March 27. one-half percentage point below its peak in June and July of 1991. The interest rate on conventional fixed-rate mortgages is now 80 basis points above its trough in early January, having increased by 35 basis points to about 9 percent over the intermeeting period. Yields on corporate bonds rated A and above rose in tandem with Treasuries, preserving their narrow spreads, but bond rates for many lesser-rated borrowers, whose prospects apparently were seen to be especially improved by the stronger economic outlook, were unchanged or even fell somewhat. Spreads on bank debentures also narrowed, and indexes of bank stocks rose 2 to 3 percent, with only a very small boost from the announcement of the reserve requirement cut. while most broad stock price indexes were down between 2 and 4 percent. (3) Since the last Committee meeting, the dollar has appre- ciated about 3-1/2 percent on a weighted-average basis, primarily in response to the indications of a more buoyant economy in the United States. In addition, economic activity in several foreign countries showed signs of falling short of expectations. Economic weakness in Japan reinforced expectations of a discount rate cut and, along with further political and financial scandals, contributed to a 5-1/2 percent drop in the yen against the dollar. Japanese short-term interest rates declined 25 basis points, while long-term rates were down about 15 basis points. German short-term rates, on the other hand, rose 20 basis points and long-term rates 15 basis points on balance as money growth remained robust and inflation concerns intensified, despite faltering economic activity. On two occasions, the Desk sold small amounts of dollars against yen in cooperation with Japanese monetary authorities. Of the total amount of $150 million, $125 million was for Treasury account and $25 million for System account. (4) The broad monetary aggregates accelerated sharply in February, but M2 is estimated to have flattened and M3 to have contracted somewhat in March. From December to March, M2 and M3 grew at 4-1/4 percent and 2 percent rates, respectively, compared with the 3 and 1-1/2 percent rates expected at the last FOMC meeting. The pickup in growth from the fourth quarter to the first likely owed in part to the strengthening of income and spending. In addition, declines in market interest rates in late 1991 also provided some impetus to money growth, although that impetus probably was partly offset by increases in opportunity costs associated with the recent backup in market rates. Also contributing to faster money growth, especially in February, were accelerated individual tax refunds resulting from increased electronic filings and a surge in refinancings of securitized mortgage loans. The deceleration of M2 in March likely reflects diminished effects of these special factors and the widening opportunity costs. Runoffs of money funds, occasioned by the rise in short-term market interest rates, also weakened the broad aggregates in March. Although M2 picked up in the first quarter and ran above the path expected at the last meeting, its growth is still appreciably below the pace predicted on the basis of historical relationships with income and short-term interest rates. Velocity is estimated to have been about flat in the first quarter, compared with a 2 percent decline predicted by the standard staff model. 3. Prepayments on mortgages that have been securitized typically are held in demand deposits for 15 to 45 days prior to disbursement to holders of mortgage-backed securities, in accordance with the provisions of GNMA and FNMA contracts. Data on GNMA prepayments are not yet available for February, but estimates based on the experience of FNMA securities suggest that overall prepayment activity may have boosted M2 growth a percentage point or less last month. The effect of accelerated refunds likely was of roughly similar magnitude. A number of factors likely account for this continuing shift in M2 demand, including sizable outflows to bond and stock mutual funds, which remained quite strong into March, and preferences for financing spending by drawing down financial assets rather than taking on new debt. (5) Liquid components continued to provide the major impetus to money growth over February and March, in part reflecting still narrow opportunity costs relative to short-term market rates and to returns on small time deposits. Demand deposits have been particularly strong, expanding at a 35 percent rate over February and March. A Senior Finan- cial Officer Survey of large banks in March indicated that the recent bulge in demand deposits was attributable mainly to the effects of lower interest rates, operating through increased compensating balance requirements and reduced incentives to economize on these deposits by shifting funds to other instruments. A number of respondents also cited increased activity in financial markets and higher balances held by mortgage servicers (likely because of the surge in refinancings). The bulge in demand deposits helped to boost M1 growth to a 19-1/4 percent rate from December to March. 4 (6) Bank credit has grown little in February and March. Bank acquisitions of government securities continued to run below the pace of late last year, perhaps owing to a reassessment of the repayment risk associated with CMOs in light of the recent heavy volume of mortgage refinancings. At the same time, bank real estate loans have increased on balance, perhaps as the backup in rates encouraged them to hold rather than to securitize loans whose market value had declined. None- theless, total bank loans have declined over recent months, held down by 4. The increased strength in transaction deposits and required reserves lifted the growth of total reserves to a 26-1/4 percent rate over December to March. Currency expanded at a 7-1/2 percent rate and the monetary base at a 10-1/4 percent rate over the three months. falling business and consumer loans. The dropoff in business loans does not seem to result from any further tightening of lending terms; indeed, the February Survey of Terms of Bank Lending indicated that the spread of business lending rates over market rates has narrowed and the January Bank Lending Practices Survey suggested little change in credit standards for such loans. The latter survey also showed a bit more willing- ness to provide consumer credit; the drop in consumer loans partly reflected continuing securitization of such credit. (7) Along with bank lending, total credit growth appears to have remained quite weak, despite the pickup in spending. Growth in the debt of domestic nonfinancial sectors is estimated to have increased at an average rate of only 3 percent over January and February, restrained by an anemic 2 percent average rate of growth for the debt of nonfederal borrowers. Business funding needs have been quite modest as inventories have declined and corporations have found it attractive to issue high volumes of equity to reduce reliance on debt. Gross issuance of cor- porate bonds, which remained strong in February and March, included sizable refinancing of callable debt. Households seem to be taking on larger volumes of mortgage debt to finance home purchases. In addition, households may be increasing primary mortgage indebtedness in the process of refinancing existing mortgages, although reports suggest they are using the extra cash to repay home equity and consumer credit. Nonetheless, consumer credit probably increased slightly over the first two months of the year, after dropping through much of 1991. MONEY, CREDIT, AND RESERVE AGGREGATES (Seasonally adjusted annual rates of growth) Jan. Feb. Mar.p Dec. to Mar. p M1 16.2 27.0 13.8 19.3 M2 3.2 9.4 .3 4.3 4.1 M3 1.4 7.0 -2.8 1.9 1.8 2.4 3.3 1.8 3.5 3.0 QIV'91 to Mar.P 17.3 Money and credit aggregates Domestic nonfinancial debt Bank credit 3.2 .5 Reserve measures Nonborrowed reserves 1 12.8 48.9 18.4 27.2 26.5 Total reserves 13.7 45.3 18.6 26.3 25.8 9.1 16.4 5.0 10.3 233 75 82 - 1003 1065 762 - Monetary base Memo: 9.7 (Millions of dollars) Adjustment plus seasonal borrowing Excess reserves p - Preliminary estimate. 1. 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 (8) Three policy alternatives are presented below for consideration by the Committee. Under alternative B, federal funds would continue to trade around 4 percent in association with an initial borrowing allowance of $100 million. Over the intermeeting period, the borrowing allowance likely would need to be increased to accommodate a rise in demands for seasonal credit, but probably by less than in previous years owing to the less attractive rate on such credit under the new program. Under alternative A, the federal funds rate would decline to the 3-1/2 percent area in conjunction with a reduction in the initial borrowing allowance to $75 million. 5 In contrast, the funds rate would return to 4-1/2 percent and the initial borrowing allowance would increase to $125 million under alternative C. Under any of the alterna- tives, the staff anticipates little difficulty in bank reserve management from the cut in reserve requirements effective in early April, and as a result there is unlikely to be much additional funds market volatility. Part of the initial reduction in required reserve balances, estimated at $8-1/2 billion, will be offset by the seasonal upsurge in required reserves on transaction deposits; but even after this bulge abates, the total of required reserves plus required clearing balances should be above the level needed for clearing purposes. 5. The difference in the borrowing assumptions between alternatives B and alternatives A and C has been narrowed from $50 to $25 million. This modification has been made to take into account the advent of the market-based rate for seasonal credit, which likely renders such credit unresponsive to changes in federal funds rates, and also the damped response of adjustment credit to variations in the spread between the federal funds rate and discount rate observed over the last year. 6. To date, only a few banks have increased their required clearing balances or communicated their intention to do so to offset the drop in required reserve balances. (9) Markets appear to anticipate no change in policy over the intermeeting period, and thus interest rates should remain close to current levels under alternative B. Nevertheless, there could be a downward bias to rate movements over coming months. Information on the economy consistent with the greenbook forecast may be somewhat more mixed than recent releases, and with aggregate price measures damped and money growth slower, expectations of future inflation and the likelihood of monetary tightening later in the year could be revised down. Any tendency toward rate declines might be reinforced if the market became convinced that a fiscal stimulus package had been definitively ruled out. Under these circumstances, the dollar could reverse some of its recent gains. (10) The steepening yield curve for maturities out to two years and the pattern of futures market quotations suggest some firming of expectations that policy will tighten beginning later in the year. In this context, the unexpected easing of money market conditions of alternative A might cause a market reassessment of the intentions of the Federal Reserve, leading to a significant downward revision in the expected course of short-term interest rates for the next year or so. Short-term rates would fall by about the 1/2 percentage point drop in the funds rate, and some intermediate-term rates might drop quite substantially as well. Effects on expected rates at longer horizons are more difficult to judge. In the absence of a worsening in the economic outlook, the easing might be interpreted as expansionary--and potentially inflationary--and short-term rates would be expected to rebound ultimately to even higher levels than market participants now anticipate; in this event, bond yields might drop relatively little, if at all. If the policy ease came to be seen as needed to counter threats to the expansion, however, arising perhaps from recent upward movements in long-term interest rates and exchange rates, the action could be viewed as promising lower short-term rates for a considerable period, and bond rates would move down appreciably. In either case, the dollar would fall. (11) The tightening of policy under alternative C would lead to about a 50 basis point rise in money market rates, which likely would be passed through fully to the prime rate. Long-term rates also would rise and the dollar would firm, especially if the Federal Reserve's action were taken as confirming views that a robust expansion was well established with inflationary potential. On the other hand, to the extent that market participants saw the early move as improving prospects for disinflation or that the action would be reversed quickly because it risked undermining an acceptable economic recovery, effects on bond yields would be limited. (12) Absent an easing of reserve conditions, expansion in M2 and M3 is expected to be slower over the second quarter than over the first. Projections for money growth over the March-to-June period under all three alternatives are given in the table below and on the table and charts on the following pages. Under the unchanged reserve conditions of alternative B, M2 growth is projected to moderate to a 3-1/2 percent rate from March to June. leaving this aggregate below the midpoint of its annual range. Although more rapid income growth would tend to boost demands for M2 at the relatively stable interest rates of this alternative, the lagged effects of the rise in market interest rates over the past few months will be restraining money growth relative to income. addition, a number of the special factors boosting money growth in the In -10- Alt. A Alt. B Alt. C 4-1/2 2 13 3-1/2 1-1/2 11 2-1/2 1 9 4-1/4 2 15-3/4 4 1-3/4 15 3-1/2 1-1/2 14 Growth from March to June M2 M3 M1 Implied growth from 1991:Q4 to June M2 M3 M1 first quarter will no longer be at work, and in some cases their effects will be reversing. One such factor is the shifting of tax refunds into February from later months. Another involves mortgage refinancing; such activity already may have leveled out with depressing effects on growth of demand deposits, and refinancing could well decline subsequently in response to the rise in mortgage rates, causing currently swollen demand deposit accounts of mortgage servicers to be drawn down. The slowdown in M2 over the March-to-June period would be concentrated in the M1 component, which still is expected to expand at a 11 percent rate. 8 Given that opportunity costs on its more liquid 7. Projections of money growth are especially uncertain at this time of year owing to the massive payment flows associated with the April 15 tax date. Changes in nonwithheld tax payments this year are projected to be well within the experience of recent years. Thus, we are assuming that these flows are captured by existing seasonal factors. 8. The cut in the reserve requirement on transaction deposits is expected to have little net effect on M1. Banks may bid slightly more aggressively for NOW accounts, but compensating balance requirements, which are usually calculated to incorporate the cost of reserve requirements, will be lower. The continued strength in transaction components results in projected growth over March to June in required and total reserves at rates of 13-1/2 and 14-3/4 percent, respectively, after adjusting for the effects of the change in reserve requirements. The monetary base would expand at a 7-1/2 percent rate. 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 3448.5 3475.6 3476.5 3448.5 3475.6 3476.5 3448.5 3475.6 3476.5 4177.1 4201.5 4191.7 4177.1 4201.5 4191.7 4177.1 4201.5 4191.7 910.3 930.8 941.5 910.3 930.8 941.5 910.3 930.8 941.5 3488.1 3501.2 3515.8 3486.6 3496.8 3507.0 3485.1 3492.4 3498.2 4196.2 4203.9 4213.4 4195.2 4201.1 4208.1 4194.2 4198.3 4202.8 950.9 961.2 972.4 950.1 958.8 967.6 949.3 956.4 962.8 3.2 9.4 0.3 3.2 9.4 0.3 3.2 9.4 0.3 1.4 7.0 -2.8 1.4 7.0 -2.8 1.4 7.0 -2.8 16.2 27.0 13.8 16.2 27.0 13.8 16.2 27.0 13.8 4.0 4.5 5.0 3.5 3.5 3.5 3.0 2.5 2.0 1.3 2.2 2.7 1.0 1.7 2.0 0.7 1.2 1.3 12.0 13.0 14.0 11.0 11.0 11.0 10.0 9.0 8.0 Quarterly Ave. Growth Rates 1991 Q1 Q2 Q3 Q4 1992 Q1 Q2 3.7 4.4 0.6 2.3 4.4 4.0 3.7 4.4 0.6 2.3 4.4 3.5 3.7 4.4 0.6 2.3 4.4 2.9 3.4 1.8 -1.3 1.0 2.3 1.4 3.4 1.8 -1.3 1.0 2.3 1.1 3.4 1.8 -1.3 1.0 2.3 0.8 5.2 7.4 7.5 11.1 16.8 14.7 5.2 7.4 7.5 11.1 16.8 13.5 5.2 7.4 7.5 11.1 16.8 12.4 Sep 91 to Dec 91 Dec 91 to Mar 92 Mar 92 to Jun 92 3.3 4.3 4.5 3.3 4.3 3.5 3.3 4.3 2.5 1.9 1.9 2.1 1.9 1.9 1.6 1.9 1.9 1.1 12.0 19.3 13.1 12.0 19.3 11.1 12.0 19.3 9.1 2.8 3.9 4.1 4.3 2.8 3.9 4.1 3.9 2.8 3.7 4.1 3.4 1.2 1.8 1.8 1.9 1.2 1.7 1.8 1.7 1.2 1.5 1.8 1.5 8.0 16.0 17.3 15.8 8.0 15.4 17.3 14.9 8.0 14.8 17.3 14.0 Levels in billions 1992 January February March April May June Monthly Growth Rates 1992 January February March April May June Q4 Q4 Q4 Q4 90 91 91 91 to to to to Q4 91 Q2 92 Mar 92 June 92 1992 Target Ranges: 2.5 to 6.5 1.0 to 5.0 I Chart 1 ACTUAL AND TARGETED M2 Billions of dollars 3700 6.5% Actual Level * Short-Run Alternatives -j 3650 - 3600 -4 3550 -1 3500 -1 3450 -4 3400 I O I N 1991 I D I J I F I M I A I M I J I J 1992 I A I S I O N D 3350 Chart 2 ACTUAL AND TARGETED M3 Billions of dollars 4425 Actual Level * Short-Run Alternatives 4375 4325 4275 4225 4175 4125 ,* O N 1991 l l' D J F M A M J J 1992 A S O N D 4075 Chart 3 M1 Billions of dollars Actual Level ------ 15% A s' i I - 990 990 10% Growth From Fourth Quarter • s / -970 B SC - ' / S 1991 I -- N -- \-\-- 1992 - ----- 970 --- - 910 , -r * S0% ..............................................---------........ - O / I \-- - - -- I- I - 930 .. °- , I-1-- 1991 I D J 950 5% , -- 1--- I-- I - - - - - F - - - - - M - - - - A - - M - - J - - J - - A - - S - - O - - N - - D 890 890 Chart 4 DEBT Billions of dollars - - -- Actual Level Estimated Level -4 12300 8.5% * Projected Level 12100 -- 11900 ,.w 4.5% -1 11700 - 11500 -- 11300 -1 11100 a I O N 1991 D J F M I A I M I J I J 1992 I A I S I O I N D 10900 -12- components remain favorable, inflows to nontransaction M2 are expected to continue to be concentrated in savings deposits (including MMDAs), while sizable outflows from retail time deposits persist. (13) As a consequence of rising opportunity costs and waning effects of special factors, M2 velocity is projected to increase significantly in the second quarter--at about a 2 percent annual rate under alternative B. The modest deceleration of M2 embodied in this alterna- tive is expected to be consistent with the greenbook forecast of a continued pickup in the economy. With credit flows concentrated in longer- term markets, depositories will remain fairly unaggressive bidders for deposits, and households will continue to direct savings to capital market instruments. In these circumstances, the staff is forecasting a 1-1/2 percent increase in M2 velocity over the four quarters of 1992 under the greenbook forecast, the same change in velocity as was forecast in February. For the year, M2 now would be expected to increase around 4 percent, a little faster than projected in February in line with stronger projected nominal GDP. (14) Growth in M3 under alternative B would moderate slightly to a 1-1/2 percent pace over the March-to-June period. In addition to weaker M2 growth, M3 money funds should be about unchanged over the second quarter under conditions of stable money market rates. On the other hand, deposit inflows at banks might firm as their asset growth strengthens a bit. With improving capital positions and better access to funding markets, banks might become a little more willing to hold the loans that they originate, rather than sell them. Demands for commer- cial and industrial loans are likely to strengthen a little, as inventory liquidation abates. Nonetheless, businesses are expected to con- tinue to concentrate much of their financing in bond and equity markets -13- as they repair balance sheets. Net mortgage borrowing by households is expected to rise, accompanying the recovery in housing activity, with the bulk of these funds coming from the open market through mortgage securities. Indebtedness of the nonfederal sectors should grow a little faster over the March-to-June period, but, at only a 3 percent annual rate of expansion, will remain quite anemic. Federal debt, in contrast, will accelerate noticeably, boosting overall debt growth to a 6 percent pace over the second quarter and lifting the debt aggregate to within its 1992 monitoring range at quarter-end. (15) Under the lower interest rates of alternative A, M2 is expected to grow at a 4-1/2 percent rate over the March-to-June period, keeping this aggregate around the midpoint of its 1992 target range. The decline in market rates would boost inflows to M1 accounts and money market mutual funds, although the still-lower return on retail balances in M2 relative to those seen on capital market instruments would again encourage some M2 holders to divert balances to the bond and equity markets. M3 would continue to grow at a 2 percent rate over the March- to-June period, remaining noticeably above the lower end of its range. (16) M2 growth would slacken to a 2-1/2 percent rate over the March-to-June period under alternative C, bringing this aggregate appreciably below the midpoint of its annual range. would be in its M1 component. Much of the slowing In the context of a somewhat more uncer- tain outlook for the recovery, bankers might remain highly cautious lenders and continue to hold their balance sheets in check; sluggish bank credit growth and likely runoffs of M3 money funds would imply M3 growth of only 1 percent at an annual rate over the March-to-June period. -14- Directive Language (17) 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 SOMEWHAT/maintain/ INCREASE SOMEWHAT the existing degree of pressure on reserve positions. In the context of the Committee's long-run objectives for price stability and sustainable economic growth, and giving careful consideration to economic, financial, and monetary developments, 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 M2 and M3 over the period from[DEL: December through] March THROUGH JUNE at annual rates of about percent, respectively. ___ AND [DEL: ____ 3 and 1-1/2] March 27, 1992 SELECTED INTEREST RATES (percent) Short-Term federal funds -High - Low 92 -High - Low comm. paper 1-month money market mutual fund bank prime loan U.S. government constant maturity yields 30-year 3-year 10-year corporate conventional home A-utility muncipal secondary primary recently Bond market market ARM aoered Buyer fied-rate fixed-rate 2 3 4 5 6 7 8 9 10 11 12 13 14 15 7.46 4.22 6.46 6.49 3.93 6.43 4.01 7.75 4.25 8.49 4.88 7.37 4.53 9.93 3.84 7.07 7.47 5.24 8.35 6.96 8.52 7.58 9.96 8.49 7.40 6.76 9.97 8.38 9.75 8.35 7.78 6.02 420 3.87 4.05 3.76 422 3.82 4.51 3.89 4.32 3.94 5.02 4.00 4.51 3.72 6.50 6.50 6.32 5.11 7.65 6.79 8.04 7.44 8.99 8.46 6.87 6.53 9.22 8.36 9.03 823 622 5.78 5.90 5.65 5.46 5.57 5.58 5.33 521 4.99 4.56 4.07 5.92 5.71 5.61 5.75 5.70 4.61 4.10 6.00 5.85 5.76 5.96 5.91 5.45 5.26 5.04 4.64 4.17 6.45 6.06 5.91 6.07 5.98 5.65 5.47 5.33 4.94 4.47 6.48 6.08 5.91 6.06 5.98 5.72 5.57 5.29 4.95 4.98 6.12 5.89 5.60 5.49 5.46 5.38 5.24 5.03 4.82 4.61 9.00 9.00 8.50 8.50 8.50 8.50 8.20 8.00 7.58 7.21 7.35 7.23 7.12 7.39 7.38 6.80 6.50 6.23 5.90 5.39 8.11 8.04 8.07 828 827 7.90 7.65 7.53 7.42 7.09 8.29 821 827 8.47 8.45 8.14 7.95 7.93 7.92 7.70 9.58 9.46 9.45 9.53 9.55 925 9.05 9.02 8.95 8.68 7.32 724 7.13 7.30 7.18 7.05 6.97 6.89 6.89 6.87 9.81 9.75 9.73 9.93 9.79 9.44 9.18 9.04 8.86 8.56 9.50 9.49 9.47 9.62 9.57 924 9.01 8.86 8.71 8.50 7.47 7.38 7.22 7.24 723 7.08 6.87 6.71 6.42 6.19 1_1 91 Treasury bills secondary market 3-month 6-month 1i-year Long-Term CDs secondary market 3-month 1 16 Monthly Mar Apr 91 91 May 91 Jun Jul Aug Sep Oct Nov Dec 91 91 91 91 91 91 91 6.12 5.91 5.78 5.90 5.82 5.66 5.45 5.21 4.81 4.43 Jan Feb Weekly 92 92 4.03 4.06 3.80 3.84 3.87 3.93 3.95 4.08 4.05 4.07 4.11 4.11 4.18 3.84 6.50 6.50 5.40 5.72 7.03 7.34 7.58 7.85 8.57 8.79 6.67 6.83 8.65 8.92 8.43 8.78 5.89 5.88 Dec 11 91 Dec Dec 18 91 25 91 4.54 4.49 4.22 421 4.13 3.84 4.21 4.17 3.93 427 4.21 4.01 4.57 4.45 425 5.00 4.90 4.88 4.63 4.59 4.53 7.50 7.50 7.07 5.52 5.44 5.24 722 720 6.96 7.80 7.77 7.58 8.76 8.57 8.49 6.90 6.84 6.76 8.67 8.47 8.38 8.53 8.49 8.35 623 621 6.02 Jan Jan Jan Jan Jan 1 8 15 22 29 92 92 92 92 92 4.19 4.19 4.01 3.87 4.01 3.86 3.80 3.81 3.77 3.82 3.88 3.83 3.86 3.86 3.90 3.95 3.89 3.95 3.94 4.00 4.32 4.02 4.03 4.07 4.07 5.02 4.19 4.07 4.09 4.08 4.51 4.40 4.19 4.14 3.99 6.50 6.50 6.50 6.50 6.50 5.14 5.11 5.32 5.43 5.61 6.79 6.80 6.93 7.09 722 7.47 7.44 7.50 7.61 7.71 8.46 8.49 8.58 8.67 8.72 6.68 6.53 6.66 6.70 6.76 8.39 8.36 8.67 8.83 8.98 824 823 8.45 8.56 8.68 5.94 5.79 5.89 5.90 5.93 Feb Feb Feb Feb 5 12 19 26 92 92 92 92 4.17 3.93 4.20 3.96 3.84 3.76 3.81 3.93 3.91 3.82 3.92 4.04 4.01 3.94 4.10 421 4.06 3.94 4.07 4.18 4.09 4.00 4.13 4.18 3.92 3.85 3.78 3.78 6.50 6.50 6.50 6.50 5.67 5.53 5.76 5.89 7.30 723 7.42 7.78 7.78 7.93 7.92 8.71 8.85 8.87 8.72 6.79 6.85 6.85 6.82 8.74 9.04 9.02 8.89 8.67 8.73 8.82 8.83 5.87 5.78 5.92 5.93 Mar Mar Mar Mar 4 11 18 25 92 92 92 92 4.08 3.95 4.04 3.94 3.99 4.02 4.05 4.05 4.07 4.14 422 4.21 4.22 4.37 4.51 4.45 4.16 4.24 4.30 427 4.23 427 4.32 4.29 3.75 3.72 3.72 3.73 6.50 6.50 6.50 6.50 5.89 6.05 6.32 6.30 7.37 7.47 7.65 7.58 7.88 7.92 8.04 7.99 8.86 8.99 8.98 6.82 6.86 6.87 6.87 9.10 9.19 922 8.85 8.88 9.03 5.99 6.04 6.22 24 92 25 92 26 92 3.86 3.95 4.07 4.05 4.01 4.01 4.19 4.16 4.15 4.42 4.38 4.36 428 4.22 4.18 4.29 425 423 - 6.50 6.50 6.50 626 6.22 623 7.53 7.53 7.57 7.94 7.94 7.99 Daily Mar Mar Mar 5.39 5.25 5.04 7.43 - - NOTE: Weekly data for columns 1 through 11 are statement week averages. Data n column 7 are taken from Donoghu's Money Fund Report Columns 12 13 and 14 are 1-day quotesar Friday, Thursday o Frid, repectively following the end of the statement week. Column 13 athe Bond Buyer revenue Index. Column 14 is the FNMA purchase yeld, plus lon servicig fee, on 30-day mndaory delverycommtmens. Column 15 theaverage contract rate on new commitments forfixed-rate mortgages (FRMs) with 80 percent loan-to-value ratos at major Institutional lenders. Column 16 is the average niial contract teon nw commbntents for 1-earw ajustelerate mortgages (ARMs) at major institutional lenders offering both FRMs and ARMs with the same number of discount points. Strictly Confidential (FR) FOMC Class II Money and Credit Aggregate Measures Seasonally adjusted MAR. Money stock measures and liquid assets Period M2 Mt 1 ANN. GROHTH RATES I%) : ANNUALLY (Q4 TO Q41 1989 1990 1991 QUARTERLY AVERAGE 1991-2nd QTR. 1991-3rd QTR. 1991-4th QTR. 1992-1st QTR. pe MONTHLY 1991-MAR. APR. MAY JUNE JULY AUG. SEP. OCT. NOV. DEC. 1992-JAN. FEB. MAR. pe LEVELS I(BILLIONS) : MONTHLY 1991-OCT. NOV. DEC. 1992-JAN. FEB. HEEKLY 1992-FEB. MAR. 2 9 p 16 p Bank credit Domestic nonfinancial debt1 M3 L total loans and lnvestments 5 6 7 8 9 10 in M3 only in M2 3 2" 4 U.S. government' other' total' 6.2 3.9 1.1 -0.9 -7.2 -5.5 3.6 1.7 1.2 4.8 1.8 0.5 7.5 5.5 3.4 7.3 10.3 11.2 8.4 6.1 2.4 8.2 7.0 4.5 4 3.4 -1.6 -0.7 0 -9.7 -9.8 -4.9 1.8 -1.3 1.0 -1.9 0.7 0.2 2.9 1.8 5.7 6.8 13.9 12.2 3.4 1.9 1.7 4.2 4.7 4.3 8.8 0.6 11.7 9.0 3.8 9.1 7.6 12.2 14.3 9.2 6.2 2.7 4.0 2.2 -1.5 0.7 0.7 2.1 4.8 2.9 5.4 3.3 1.5 -0.1 -3.3 -2.1 -1.7 -1.4 1.5 0.7 -17.9 -7.7 -14.1 -14.1 -9.5 -4.5 -9.5 0.5 -8.3 -5.7 1.6 0.7 0.6 -0.8 -3.0 -0.2 -1.1 -6.3 -4.7 6.8 1.2 -1.5 -2.6 0.9 3.1 -0.4 5.5 1.6 0.8 3.8 0.5 0.9 4.8 6.8 7.1 6.1 6.6 -1.9 11.8 16.0 12.3 15.3 12.3 13.1 .,10.8 7.7 3.2 3.7 3.9 2.5 1.4 1.2 1.5 1.7 2.4 1.5 4.0 2.4 5.8 5.6 4.0 4.5 4.1 4.5 4.5 3.0 16.2 27.0 14 3.2 9.4 0 -1.4 3.2 -5 -7.0 -4.4 -18 1.4 7.0 -3 -1.0 3.2 0.5 5.9 1.2 2.4 880.9 891.4 898.2 3417.4 3431.1 3439.3 2536.5 2539.7 2541.1 741.5 736.4 732.9 4159.0 4167.5 4172.2 4977.8 4990.8 4989.2 2805.1 2821.6 2836.0 2723.8 2748.3 2766.0 8422.5 8439.6 8450.3 11146.3 11187.9 11216.2 910.3 930.8 3448.5 3475.6 2538.1 2544.8 728.6 725.9 4177.1 4201.5 4984.9 2843.5 2844.6 2779.7 8459.1 11238.7 921.1 927.1 931.4 934.2 3462.6 3473.4 3478.0 3477.5 2541.4 2546.3 2546.6 2543.4 729.8 723.6 738.1 714.7 4192.3 4197.1 4216.1 4192.2 935.0 939.6 943.4 3478.7 3482.5 3478.2 2543.7 2542.9 2534.8 725.6 718.1 718.6 4204.3 4200.6 4196.7 0.6 4.2 8.0 4.8 4.0 7.4 7.5 11.1 4.4 0.7 2.3 16k S __ _ 1. nontransactions components 30, 1992 2.8 _ _ __ _ _ _ _ -7 _ I __ __ 2k -1.2 1.8 2.5 1.4 _ J _ _ _ _I_ _ _ _ I _ __ _ __ ._ __ _ I 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). Class II FOMC Components of Money Stock and Related Measures seasonally adjusted unless otherwise noted Small Money market Large denomi- mutual funds denomi- Other Overnight Currency Demand deposits checkable deposits RPs and Eurodollars NSA' Savings deposits' nation time deposis' _ 1 2 3 4 5 6 221.2 245.5 266.0 279.2 277.5 287.0 282.8 292.7 329.1 76.2 78.8 72.8 884.7 919.9 1028.8 MONTHLY 1991-FEB. MAR. 254.6 256.0 275.9 276.9 297.5 301.3 70.4 69.2 APR. MAY JUNE 256.3 256.6 257.6 276.1 278.4 280.1 302.5 307.8 311.6 JULY AUG. SEP. 259.3 261.3 262.9 279.3 280.1 280.6 OCT. NOV. DEC. 264.8 266.0 267.3 1992-JAN. FEB. 269.4 271.6 Period MAR. general purpose and broker/ Short- 30, 1992 Bankers Institutions only nation time deposits' Term RPs NSA' Term Eurodollars NSA' Savings bonds term Treasury securilies Commer cial paper' acceptances 7 8 9 10 11 12 13 14 IS 1145.3 1167.7 1079.1 311.2 346.2 359.8 106.8 130.1 173.6 561.3 501.9 443.1 106.8 93.6 73.4 78.8 68.0 61.3 116.8 125.2 137.0 320.3 331.1 320.3 349.1 357.4 337.9 40.3 33.6 24.4 931.0 941.7 1169.5 1165.9 361.0 365.0 145.5 148.5 499.6 492.8 86.7 83.5 69.8 68.2 127.9 129.0 328.8 323.5 357.1 353.8 34.6 32.1 69.6 68.5 67.9 953.0 966.1 976.8 1159.4 1150.9 1140.6 366.6 367.8 368.8 152.9 155.2 155.3 487.7 483.5 478.3 82.2 80.4 78.4 65.2 62.3 61.6 130.1 131.3 132.4 307.3 299.5 325.1 341.6 327.9 333.0 30.6 29.1 28.1 313.7 317.3 320.6 64.8 67.3 66.4 986.1 994.1 1002.4 1129.5 1120.8 1111.0 367.9 362.4 359.9 155.4 158.6 162.6 471.2 465.5 458.5 78.8 78.4 76.7 62.7 63.6 61.5 133.5 134.4 135.2 332.7 330.4 322.9 339.8 336.3 337.7 28.1 27.2 25.8 283.8 287.6 289.5 324.5 329.7 333.2 69.5 73.3 75.7 1015.0 1028.7 1042.6 1095.2 1079.2 1063.0 359.3 359.5 360.5 168.2 173.6 179.1 450.0 442.3 437.1 75.5 73.7 70.9 63.0 62.3 58.5 136.1 137.1 137.9 321.2 323.7 316.1 336.2 337.9 339.7 25.3 24.5 23.3 293.9 305.1 338.9 346.0 77.4 77.5 1061.3 1084.2 1042.6 1019.0 360.0 363.7 182.4 188.2 427.9 421.9 70.9 72.0 57.3 57.8 138.9 310.9 334.8 23.2 dealer' LEVELS ($BILLIONS) : ANNUALLY 14TH QTR.) 1989 1990 1991 ___ 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 ii nstitutions are subtracted from small time deposits. Excludes IRA and Keogh accounts. Net of large denomination time deposits held by money market mutual funds and thrift institutions. p-preliminary STRICTLY CONFIDENTIAL (FR) CLASS II-FOMC NET CHANGES IN SYSTEM HOLDINGS OF SECURITES 1 Millions of dollars, not seasonally adjusted March 27,1992 Treasur Net change outright Period 1989 1990 1991 1.468 17,448 20,038 12,730 4.400 1.000 -11,263 13,048 19,038 1990 -01 -02 -03 -04 -3,799 10,892 5,115 5.241 1,400 3,000 -5.199 10.892 5,115 2.241 1991 -01 -02 -03 -04 2,160 4,356 7,664 1.000 - 1,160 4,356 7,664 1991 313 908 3,411 37 1,359 5.776 529 2,198 2.823 837 313 908 3,411 37 1,359 5,776 529 2,198 2.823 837 -1,628 -3,228 123 Mach April May June July August September October November December 1992 January February 5858 123 - 327 425 3,043 946 50 6.583 258 -100 1.280 - 500 - 1.315 375 11,282 - - 200 - -- - 150 ISO -100 - - 25 2,950 550 650 2.433 400 880 375 - 4,150 1,450 1,815 3,867 2.950 550 50 - -- - 3,700 1,250 200 - - 340 -- - 850 375 - --- - - 5858 284 375 - -10.390 -1.683 13,240 25,199 11,128 -5,000 10,964 5,045 2,230 -4.061 650 2.133 300 880 - 500 -2,124 16.805 5.310 -16.864 902 152 14.106 3,172 9,419 7.299 3.567 300 1.068 37 1,929 6.116 1.374 2.185 4,022 1,092 -14.793 1,370 -1,153 775 71 -2.134 2.216 6,942 -8,871 16,035 1,027 -3,313 1,150 -12,874 -2,010 -45 8,250 6,050 4,013 2.067 625 - -1,614 Weekly December 25 January 1 8 15 22 29 February 5 12 19 26 March 4 11 18 25 Memo: LEVEL (bil $) 6 March 25 -221 -498 -909 39 5.150 -5,495 -1,096 -400 2211 123 -16.195 -1.059 -255 -933 -1,725 -221 -898 -1.709 -400 123 395 755 39 -0 625 839 135.7 34.0 62.5 15.2 277.9 136.3 24.6 11.087 -9,995 1,892 1.165 3,800 -6,138 -6.1 ' 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 bills. Excludes maturity shifts and rollovers of maturing Issues. 4. Reflects net change in redemptions (-) of Tre asury and agency securities. 5. Includes change in RPs (+), matched sale-purchase transactions (-), and matched purchase sale transactions (+). 6. The levels of agency issues were as follows: within 1 yewr March 25 2.3 1-5 2.8 5-10 0.8 over 10 total 0.2 6.1 

Federal Reserve (1992, March 30). Bluebook. Bluebooks, Federal Reserve. https://whenthefedspeaks.com/doc/bluebook_19920331

@misc{wtfs_bluebook_19920331,
  author = {Federal Reserve},
  title = {Bluebook},
  year = {1992},
  month = {Mar},
  howpublished = {Bluebooks, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/bluebook_19920331},
  note = {Retrieved via When the Fed Speaks corpus}
}