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. 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) August 14, 1992 Class I - FOMC MONETARY POLICY ALTERNATIVES Recent Developments (1) On July 2, the day after the FOMC meeting, the discount rate and the intended federal funds rate were reduced 50 basis points to 3 and 3-1/4 percent, respectively. These actions were taken in response to data suggesting that the economic expansion was more subdued than anticipated, and against a background of marked weakness in the broad monetary aggregates, sluggish credit growth, and continuing disinflaOver the balance of the period, the intended federal funds rate tion. remained at 3-1/4 percent. The allowance for adjustment and seasonal borrowing was maintained at $225 million until July 30, when it was raised by $25 million to account for increasing demands for seasonal credit. Borrowing averaged close to its allowance in the two complete maintenance periods since the meeting, and the federal funds rate has averaged 3.25 percent. (2) The weak economic data and policy easing prompted a con- siderable decline in market rates across the maturity spectrum on July 2. Note and bond markets have rallied further in recent weeks, as incoming information suggested limited momentum in the economic recovery and more favorable price and wage trends. On balance over the period, rates on both three-month Treasury bills and on thirty-year Treasury bonds dropped a little more than 40 basis points. Intermediate-term rates fell by even more--from 60 to 70 basis points. This pattern sug- gests that the drop in long-term rates was accounted for by downward revisions of expected credit demands and inflation over the next few 1. Financial markets quotations in the bluebook reflect data available through noon, August 14. years, rather than a reconsideration of longer-term inflation expectations. Rates on fixed-rate home mortgages fell about 45 basis points over the intermeeting period, somewhat less than yields on intermediateterm Treasuries, partly reflecting a reassessment of prepayment risk as a result of the unexpectedly sharp pickup in refinancing activity. In other markets, spreads of yields on private securities over Treasury issues remained quite narrow. Most broad stock price indexes were little changed on balance over the period. (3) The dollar's foreign exchange value on a weighted average basis has declined about 2-1/2 percent since the last FOMC meeting, as a depreciation of about 3-1/2 percent against the mark and other ERM currencies more than offset a slight appreciation against the yen. Since its recent peak in mid-April the dollar has fallen 10 percent, more than retracing the runup from year-end. The net depreciation of the dollar over the intermeeting period mainly reflected a weakening of near-term U.S. economic prospects and the associated declines in U.S. interest rates. Although the Bundesbank raised its discount rate 75 basis points on July 16, market interest rates in Germany moved only slightly higher. However, against the backdrop of questions about the future of monetary union, interest rates in other European countries rose somewhat more as central banks had to tighten to support their currencies. The Desk intervened on July 20, August 7, and August 11, purchasing a total of $770 million against marks to moderate the dollar's decline. The Bank of Japan lowered its discount rate by 1/2 percentage point; short-term market rates in Japan declined about 60 basis points, while long-term rates dropped by 40 basis points. Japanese stock prices declined by 6 percent, reaching six-year lows, while European stock markets fell 7 to 11 percent. (4) M2 and M3 continued to contract in July, decreasing at 1-1/4 and 1-3/4 percent annual rates, respectively, leaving them below the parallel bands associated with their annual ranges. Both aggregates were substantially weaker than projected, reflecting in part a shortfall In addition, velocities may have in the expansion of nominal income. shifted up a little more than anticipated, perhaps owing to a further rechanneling of credit demands outside of the depository sector, encouraged by the drop in long-term market interest rates. Bank loans con- tinued to slide in July and overall bank credit was flat. With little need for additional funds, institutions cut rates on retail deposits promptly following the July 2 easing. Rates on liquid deposits de- creased substantially, but by less than the reduction in money market yields, and growth of those deposits (including demand deposits, other checkable deposits, savings deposits, and MMDAs) picked up. 2 Yields on retail time deposits were reduced more in line with declines in market rates of comparable maturity, and small time deposits extended their steep runoff. Outflows from retail money market mutual funds acceler- ated, in contrast to the usual pattern following declines in short-term yields. Faced with wide spreads between yields on M2 balances and rates on both capital market instruments and household credit, many households evidently have continued to redirect balances toward bond and stock funds and the repayment of credit. Weakness in bank credit was also reflected in sizable runoffs of large CDs, but the non-M2 component of 2. Reflecting strong growth of transaction deposits and an acceleration of currency, M1 growth rebounded to an 11-1/2 percent rate in July. Growth in total reserves resumed, and the monetary base expanded at a 9-1/2 percent rate. M3 was supported by flows into institution-only money market funds, whose yields fell less quickly than market rates. (5) Recent declines in long-term interest rates fueled ac- tivity in bond and mortgage markets, but private debt growth overall apparently remained sluggish. In the household sector, mortgage ap- plications shot up as mortgage rates touched new lows; most such applications were to refinance existing mortgages, but those for home purchases climbed as well. Consumer installment credit contracted at a 1 percent rate in June, and bank data for July suggest little pickup. Nonfinancial firms continued to issue bonds at a brisk pace in July, mainly to refund high-cost debt and pay down short-term loans. Both business loans at banks and commercial paper ran off in July, and overall funding needs appear to have remained modest. Senior lending officers at commercial banks reported that underwriting standards on business loans were about unchanged over the past three months, continuing the trend of recent surveys; in contrast to previous surveys, banks did not report further tightening in other terms of lending. Bond offerings remained brisk in the tax-exempt sector, but a sizable proportion of the issues were for refunding purposes, and a large volume of bonds were retired with the proceeds of issues sold some time ago. With federal debt continuing to expand at a rapid pace, overall nonfinancial sector debt has increased at an estimated 4-3/4 percent rate through July, leaving this aggregate just within its monitoring range. -5- MONEY, CREDIT, AND RESERVE AGGREGATES (Seasonally adjusted annual rates of growth) May June July QIV'91 to July 14.6 -3.1 11.6 11.9 Money and credit aggregates M1 M2 .5 -3.8 -1.3 1.1 M3 -.7 -4.4 -1.8 -.5 Domestic nonfinancial debt 5.2 5.5 4.9P 4.7P Bank credit -.9 1.7 -.1 2.4 Nonborrowed reserves 1 10.5 -8.1 4.8 15.3 Total reserves 12.1 -6.3 6.2 15.5 7.7 3.9 9.6 155 229 284 1000 913 968 Reserve measures Monetary base Memo: 8.1 (Millions of dollars) Adjustment plus seasonal borrowing Excess reserves p - Partly projected. 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 (6) Three alternatives are presented below for consideration by the Committee. Under alternative B, federal funds would continue to trade around 3-1/4 percent in combination with an initial allowance for adjustment plus seasonal borrowing of $250 million.3 Under alterna- tive A, the federal funds rate would drop to 2-3/4 percent. This could be achieved by a reduction in the borrowing allowance to $225 million with the funds rate dropping below the discount rate, or by a cut in the discount rate of 1/2 percentage point with an unchanged borrowing allowance. Alternative C involves a return of the federal funds rate to 3-3/4 percent and a borrowing allowance of $275 million. (7) Market sentiment of late seems to have tilted toward some prospect of another policy ease in coming months. Although money market interest rates might firm a bit over the intermeeting period under the unchanged policy of alternative B, any increase would be limited if, consistent with the Greenbook forecast, information continued to suggest modest economic expansion. Bond rates also should remain around their current reduced levels, and could even edge down if inaction by the Federal Reserve, along with indicators of wages and prices, were seen as reinforcing disinflationary trends. If political dynamics seem to portend even higher budget deficits ahead, these downward pressures on bond yields may tend to be offset. The dollar, under alternative B, would be expected to trade around its recent lower levels. (8) Under alternative A, short-term interest rates would fall by nearly the full 50 basis point drop in the federal funds rate, especially were the easing to take the form of a discount rate cut, which 3. The borrowing allowance likely will need to be reduced in late September to reflect the usual fall-off in demands for seasonal credit. would be seen as implying that the reduction more likely would be sustained. Banks would be expected to trim another 1/2 percentage point off the prime rate, still preserving large spreads over funding costs. Some market participants might read the easing as increased emphasis on spurring economic activity, at the cost of limiting progress against inflation. Nonetheless, given the outlook for tepid economic expansion and slower inflation that recently has come to be more firmly embedded in market expectations, nominal as well as real bond yields would be likely to decline noticeably. Easing in the United States might lessen constraints on more expansive monetary policies in a few other countries, but with many countries, especially in Europe, highly unlikely to follow suit, the dollar would tend to depreciate significantly further. (9) A reversal of the July easing would take market participants completely by surprise and short-term interest rates would rise by at least 1/2 percentage point under alternative C. Bond rates, too, would retrace some of their recent declines under this alternative, at least initially, and quality spreads on private debt could widen if such a tightening were seen as placing the recovery at risk. The dollar would rebound appreciably. (10) Growth rates of the monetary aggregates under the three alternatives are presented below. The table gives projected money growth rates through year-end, on the assumption that the contemplated reserve conditions under each alternative are maintained over that period. Growth rates for M2 and M3 are projected to be quite subdued. For the June-to-September period, expansion in the broad aggregates is likely to fall well short of the rates envisioned at the time of the last Committee meeting, even if alternative A is adopted. Moreover, growth of M2 and M3 over the rest of the year would remain damped, leaving these aggregates below their annual target ranges under all the alternatives.4 Ml, on the other hand, is likely to expand at a double-digit pace over coming months, boosted by mortgage prepayments, low time deposit rates, and special factors. 5 Alt. A Alt. B Alt. C Growth from June to September M2 1-1/4 M3 Ml 1/4 13 3/4 1 0 12-1/2 -1/4 12 Growth from September to December M2 M3 Ml 3-1/4 1 11 2-1/4 1/4 9-1/4 1-1/4 -1/2 7-3/4 Growth from 1991:Q4 to 1992:Q4 M2 M3 Ml 1-3/4 0 12-1/2 1-1/2 0 12 1-1/4 -1/4 11-1/2 (11) Data for late July and early August indicate that ex- pansion of the monetary aggregates is strengthening a bit, perhaps as a consequence of the substantial decline across the maturity spectrum in market interest rates since the last FOMC meeting. However, the shortfall in July is not expected to be recovered, and underlying 4. To reach the lower end of its annual range, M2 would need to grow at a 5-1/4 percent annual rate from July through the end of the year and M3 at a 4 percent rate. 5. Ml and M2 will be boosted in mid- to late-September by shifts to OCDs of funds now commingled in large time deposits under sweep account arrangements recently prohibited by the Board. About $4 to $5 billion of such accounts has been identified at , but other banks may be affected as well. The staff foresees little effect on the monetary aggregates from the closing of other Regulation D loopholes to take effect in September; the provision classifying teller's checks as transactions deposits will not take effect until December. Alternative Levels and Growth Rates for Key Monetary Aggregates Alt. A Alt. B Alt. C Alt. A Alt. B Alt. C Alt. A Alt. B Alt. C Levels in billions 1992 June July 3458.7 3454.9 3458.7 3454.9 3458.7 3454.9 4158.0 4151.8 4158.0 4151.8 4158.0 4151.8 951.8 961.0 951.8 961.0 951.8 961.0 August September October November December 3460.1 3469.0 3478.8 3487.8 3496.5 3459.8 3467.3 3474.5 3480.6 3486.7 3459.6 3465.6 3470.2 3473.4 3476.9 4155.7 4159.8 4163.2 4166.9 4170.4 4155.3 4158.0 4159.1 4155.0 4156.4 4155.2 4153.7 4152.2 -3.8 -1.3 -3.8 -1.3 Monthly Growth Rates 1992 June July 1.8 3.1 3.4 3.1 3.0 -3.8 -1.3 -4.4 -1.8 4160.1 4161.1 -4.4 -1.8 971.8 982.8 994.3 1002.4 1009.5 -3.1 11.6 -3.1 11.6 -3.1 11.6 1.0 0.8 0.3 0.3 0.3 0.9 0.4 -0.4 -0.5 -0.4 13.5 13.6 14.0 9.8 8.5 13.1 12.7 12.4 8.0 7.0 11.2 11.0 6.2 5.5 11.1 16.4 9.8 9.1 11.0 11.1 16.4 9.8 8.8 8.1 5.5 5.5 12.0 7.7 9.9 1.6 2.1 1.6 1.1 1.2 1.1 1.2 1.0 1.1 1.0 Quarterly Ave. Growth Rates 1991 Q4 2.3 1992 Q1 4.3 Q2 0.0 -0.4 Q3 Q4 3.1 2.3 4.3 0.0 -0.6 2.3 2.3 4.3 0.0 -0.7 1.5 0.9 2.2 -1.9 -1.2 1.0 0.9 2.2 -1.9 -1.3 0.5 0.9 2.2 -1.9 -1.4 0.0 11.1 Mar Jun Sep Jun -1.8 1.0 2.2 1.6 -1.8 0.8 1.3 1.1 -3.1 0.2 1.0 0.6 -3.1 0.0 0.3 0.1 -3.1 -0.2 -0.4 -0.3 5.5 13.0 10.9 12.1 1.5 1.3 1.6 1.3 1.2 1.3 0.0 -0.2 0.1 -0.1 -0.2 -0.1 -0.3 -0.3 -0.3 12.6 12.5 12.4 92 92 92 92 to to to to Jun Sep Dec Dec 92 92 92 92 Q4 91 to Q4 92 Q4 91 to Sep 92 Q4 91 to Dec 92 1992 Target Ranges: -1.8 1.2 3.2 2.2 1.7 1.4 1.8 2.5 to 6.5 971.2 980.2 989.3 994.4 999.0 -4.4 -1.8 1.7 2.6 2.5 2.1 2.1 August September October November December 971.5 981.5 991.8 998.4 1004.2 1.0 to 5.0 16.4 9.8 9.4 10.9 12.5 12.5 9.3 11.0 12.1 12.3 11.8 11.6 12.1 11.3 Chart 1 ACTUAL AND TARGETED M2 Billions of dollars 3700 Actual Level * Short-Run Alternatives 6.5% - - 3650 3600 -- f S,, O N 1991D 1991 I I J F I M 3550 - 350 -- 3400 o.,, 2.5% - I - I A I M I J I J A 199 1992 I I S I O I N 3350 D Chart 2 ACTUAL AND TARGETED M3 Billions of dollars 4425 Actual Level SShort-Run Alternatiives 5% 4375 - 4325 - 4275 - 4225 1% S- 4175 0 A B 8 ,'A I -- I O N 1991 D J F - I M I A I M I J I J 1992 I A I S I O 4075 I N 4125 D Chart 3 M1 Billions of dollars Actual Level ------ Growth From Fourth Quarter * Short-Run Alternatives 990 970 950 S-'5% 930 910 ,-890 O N 1991 D J F M A M J J 1992 870 A S O N D Chart 4 DEBT Billions of dollars Actual Level - - - Estimated Level SProjected Level 12300 8.5% 12100 I S 11900 V V V V V o Vo s 11700 V V V V V V V V 11500 V 11300 11100 O N 1991 D J F M A M J J 1992 A S O N 10900 D -10- growth rates are expected to be slower than might have been anticipated at these lower interest rate levels. As noted above, weaker expansion of income than previously anticipated likely plays an important role in explaining the lower path of money. In addition, how- ever, the forces restraining money relative to income appear to be more intense than we thought. Spending is being financed out of in- ternal funds and by drawing down money balances, and what net borrowing there is seems likely to be even more concentrated in capital markets and away from banks. Bank credit is now projected to increase at only a 2 percent annual rate in the second half of the year. The redirection of household funds to capital market instruments and debt repayment will continue to be encouraged by the further declines in deposit rates. Moreover, runoffs of brokered deposits may be acceler- ating after the June 16 effective date of FDICIA restrictions. (12) Under alternative B, M2 is expected to resume expanding this month and to grow at a 2-1/4 percent pace on balance over the remainder of the year. M2 growth will be supported by large inflows to demand deposits in the months ahead, owing to the resumption of strong mortgage refinancing activity and a buildup in compensating balances occasioned by recent declines in market rates. With flows into OCDs also strong, Ml is projected to expand at a 10 percent pace over the balance of the year. Beyond Ml, outflows from M2 money funds are projected to abate, although the very steep yield curve is expected to continue to draw balances from such accounts and 6. Actual growth in the fourth quarter will be boosted relative to expectations at the last meeting effects. 7. Nearly half of the growth in M2 over the balance of the year is projected to come from increases in demand deposits and MMDAs associated with mortgage prepayments. 8. Total reserves and the monetary base would be expected to increase at around a 10 percent pace over June to December. from retail time deposits to capital market investments. On a quar- terly average basis, M2 would contract slightly this quarter, and increase at a 2-1/4 percent rate in the fourth quarter. This projec- tion assumes the unchanged federal funds rate of alternative B exIt im- tended through year-end and the Greenbook economic forecast. plies velocity growth at a 4 percent annual rate in the third quarter and 3-1/4 percent in the fourth. With the assumed income and interest rates, standard money demand models predict velocity decreases through this period; experimental models that embody yield-curve effects and other alternative measures of opportunity costs are predicting velocity increases in the second half of the year, though not as large as embodied in the staff forecast. (13) The firming in M2 under alternative B shows through in part to M3, which bottoms out in coming months and then edges higher. Acting to limit any pickup in this aggregate is the likelihood of anemic advances in bank credit and funding needs and some further declines in thrift credit. The failure of M3 to grow this year, as implied in all the alternatives, would be unprecedented in the official series, which begins in 1959. The extraordinary behavior of M3 is a function not only of weak depository credit but of restrained credit growth overall. With spending financed out of higher profits and by drawing down liquid assets, the debt of nonfederal sectors is projected to expand at only a 2-3/4 percent pace over the balance of the year, implying a further drop in debt-to-income ratios for both households and businesses. Continued strong federal borrowing will boost total debt growth to 4-3/4 percent for the year--near the lower end of its annual monitoring range. (14) The lower interest rates of alternative A would be expected to buoy money growth over the balance of the year. Although -12- there is some question about the strength of the near-term response of M2 to lower short-term rates, the anticipated decline in long-term rates under this alternative should damp additional adverse yield curve effects. Over time, the lower real and nominal interest rates would raise income growth and, through that channel, further augment demands for money, though the effects through year-end would be small. The slightly faster growth in M2 deposits would feed through partly to M3, as would relatively more attractive rates on M3 money funds, leading to a resumption of 1 percent expansion in this aggregate over the balance of the year. (15) Under alternative C, M2 and M3 would drop further below their annual ranges, as opportunity costs widen, banks become even more cautious lenders, and income growth is more restrained. The effects on M1 would be especially marked in the fourth quarter, given the drop in mortgage prepayments that would accompany the backup in long-term rates. Still, M1 would be expected to increase at a 10 per- cent rate from June to December. -13- Directive Language (16) sented below. Draft language for the operational paragraph is preFour alternatives for the last sentence, labeled a, b, c, and d, are shown. The first, (a), would follow the usual practice, retaining the current mid-quarter approach of updating the Committee's expectations for the quarter. The second, (b), would retain the cur- rent format but extend the money projections through year end. A third alternative, (c), would give an indication of Committee expectations for growth in M2 and M3, but would also suggest that continued expansion at a subdued pace leaving the aggregates below their long-run ranges would be acceptable in the context of unusual strength in velocity. A fourth alternative, (d), would convey the same thought without giving precise expectations for money growth. 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 might (WOULD) or slightly (SOMEWHAT) lesser reserve restraint (MIGHT) would be acceptable in the intermeeting period. (a) The contemplated reserve conditions are expected to be consistent with growth of M2 and M3 over the period from June through September at annual rates -14- of about ____ AND ____[DEL: 2 and 1/2] percent, respec- tively. (b) The contemplated reserve conditions are expected to be consistent with growth of M2 and M3 over the period from June through[DEL: September]DECEMBER at annual rates of about ___ AND ____[DEL: 2 and 1/2] per- cent, respectively. (c) The contemplated reserve conditions are expected to be associated with some pickup in the growth of M2 and M3 to annual rates of about ____ and ____ per- cent over the period from June through December. Such growth would leave the expansion of both aggregates below the Committee's ranges for the year but is anticipated to be consistent with the Committee's policy objectives given the unusual strength in velocity. (d) The contemplated reserve conditions are expected to be consistent with some pickup in the monetary aggregates, but if unusual strength in velocity persists, M2 and M3 below their annual ranges could be consistent with the Committee's policy objectives. August 14, 1992 SELECTED INTEREST RATES (percent) Short-Term federal funds Treasury bills secondary market 3-monthI 6-month I Long-Term CDs secondary market comm. paper money market mutual bank prime U.S. government constant maturity yields corporate conventional home mortgages A-utility municipal secondary primary recently Bond market I market 1-year 3-month 1-month fund loan 3-year offered Buyer 11 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 7.46 4.22 6.46 3.84 6.49 3.93 6.43 4.01 7.75 4.25 8.49 4.88 7.37 4.53 9.93 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 -- High -- Low Monthly Aug 91 Sep 91 Oct 91 Nov 91 Dec 91 4.20 3.12 4.05 3.14 4.22 3.21 4.51 3.31 4.32 3.29 5.02 3.36 4.51 3.08 6.50 6.00 6.32 4.71 7.65 6.54 8.07 7.38 8.99 8.15 6.87 6.12 9.22 8.12 9.03 7.96 6.22 5.30 5.66 5.45 5.21 4.81 4.43 5.33 5.21 4.99 4.56 4.07 5.39 5.25 5.04 4.61 4.10 5.45 5.26 5.04 4.64 4.17 5.65 5.47 5.33 4.94 4.47 5.72 5.57 5.29 4.95 4.98 5.38 5.24 5.03 4.82 4.61 8.50 8.20 8.00 7.58 7.21 6.80 6.50 6.23 5.90 5.39 7.90 7.65 7.53 7.42 7.09 8.14 7.95 7.93 7.92 7.70 9.25 9.05 9.02 8.95 8.68 7.05 6.97 6.89 6.89 6.87 9.44 9.18 9.04 8.86 8.56 9.24 9.01 8.86 8.71 8.50 7.08 6.87 6.71 6.42 6.19 Jan 92 Feb 92 Mar 92 Apr 92 May 92 Jun 92 Jul 92 Weekly Apr 29 92 4.03 4.06 3.98 3.73 3.82 3.76 3.24 3.80 3.84 4.04 3.75 3.63 3.66 3.21 3.87 3.93 4.18 3.87 3.75 3.77 3.28 3.95 4.08 4.40 4.09 3.99 3.98 3.45 4.05 4.07 4.25 4.00 3.82 3.86 3.37 4.11 4.11 4.28 4.02 3.87 3.91 3.44 4.18 3.84 3.73 3.66 3.52 3.45 3.25 6.50 6.50 6.50 6.50 6.50 6.50 6.02 5.40 5.72 6.18 5.93 5.81 5.60 4.92 7.03 7.34 7.54 7.48 7.39 7.26 6.86 7.58 7.85 7.97 7.96 7.89 7.84 7.61 8.57 8.79 8.91 8.82 8.70 8.62 8.38 6.67 6.83 6.86 6.80 6.72 6.66 6.32 8.65 8.92 9.17 8.98 8.85 8.66 8.25 8.43 8.76 8.93 8.85 8.67 8.51 8.13 5.89 5.88 6.11 6.15 6.00 5.87 5.51 3.65 3.69 3.84 4.11 3.93 3.92 3.59 6.50 6.02 7.58 8.07 8.86 6.83 9.02 8.84 6.10 91 -- High -- Low 92 I 10-year I 30-year fixed-rate fixed-rate I ARM May May May May 6 13 20 27 92 92 92 92 3.77 3.84 3.89 3.80 3.65 3.62 3.57 3.70 3.78 3.73 3.67 3.83 4.09 3.99 3.88 4.05 3.89 3.79 3.76 3.85 3.92 3.84 3.82 3.89 3.55 3.51 3.51 3.47 6.50 6.50 6.50 6.50 5.96 5.83 5.67 5.87 7.55 7.40 7.27 7.41 8.02 7.90 7.81 7.88 8.73 8.64 8.68 8.65 6.77 6.70 6.69 6.74 8.88 8.80 8.81 8.75 8.75 8.64 8.53 8.60 6.02 5.97 5.93 5.96 Jun Jun Jun Jun 3 10 17 24 92 92 92 92 3.85 3.69 3.73 3.72 3.72 3.68 3.65 3.64 3.85 3.82 3.75 3.75 4.08 4.02 3.94 3.95 3.91 3.88 3.84 3.84 3.94 3.92 3.91 3.89 3.49 3.45 3.44 3.42 6.50 6.50 6.50 6.50 5.78 5.71 5.60 5.53 7.35 7.33 7.27 7.22 7.87 7.87 7.85 7.83 8.65 8.65 8.61 8.56 6.73 6.69 6.62 6.58 8.72 8.67 8.66 8.58 8.59 8.54 8.48 8.43 5.94 5.90 5.84 5.78 Jul Jul Jul Jul Jul 1 8 15 22 29 92 92 92 92 92 3.87 3.24 3.28 3.22 3.12 3.59 3.22 3.21 3.17 3.17 3.67 3.31 3.26 3.24 3.24 3.89 3.51 3.43 3.36 3.39 3.82 3.43 3.35 3.32 3.32 3.88 3.48 3.42 3.41 3.37 3.44 3.35 3.24 3.19 3.14 6.50 6.00 6.00 6.00 6.00 5.40 5.04 4.92 4.83 4.75 7.13 6.90 6.94 6.88 6.68 7.78 7.62 7.65 7.65 7.51 8.44 8.41 8.44 8.32 8.22 6.55 6.36 6.33 6.22 6.12 8.36 8.25 8.26 8.16 8.24 8.29 8.13 8.09 8.08 8.05 5.69 5.56 5.50 5.45 5.37 Aug Aug 5 92 12 92 3.33 3.24 3.17 3.14 3.26 3.21 3.44 3.31 3.33 3.29 3.38 3.36 3.11 3.08 6.00 6.00 4.91 4.71 6.69 6.54 7.45 7.38 8.15 6.24 6.20 8.12 - 8.06 7.96 5.30 5.30 Aug Aug Aug 7 92 12 92 13 92 3.20 3.22 3.30 3.14 3.12 3.09 3.19 3.20 3.18 3.30 3.30 3.29 3.29 3.28 3.28 3.37 3.35 3.34 6.00 6.00 6.00 4.71 4.71 4.72 6.57 6.48 6.55 7.40 7.33 7.36 Daily 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. Strictly Confidential (FR)Class II FOMC Money and Credit Aggregate Measures Seasonally adjusted AUG. Money stock measures and liquid assets Period M1 M2 nontransactions components in M3 only 4 Bank credit 17, 1992 Domestic nonfinancial debt' M3 L total loans and investments' 5 6 7 8 9 U.S. government' other' total' 10 _ 2 in M2 3 0.6 4.2 8.0 4.8 4.0 2.8 6.2 3.9 1.1 -0.9 -7.2 -5.6 3.6 1.7 1.2 4.8 1.8 0.5 7.5 5.5 3.6 7.3 10.3 11.3 8.4 6.1 2.3 8.1 7.0 4.4 QUARTERLY AVERAGE 1991-3rd QTR. 1991-4th QTR. 1992-1st QTR. 1992-2nd QTR. 7.5 11.0 16.5 9.8 0.6 2.3 4.3 -0.0 -1.6 -0.7 0.0 -3.7 -9.8 -5.4 -7.3 -10.5 -1.3 0.9 2.2 -1.9 0.7 0.2 1.5 0.2 1.9 6.1 3.7 2.4 13.9 12.3 8.2 13.1 1.6 1.6 2.3 2.7 4.5 4.2 3.8 5.3 MONTHLY 1991-JULY AUG. SEP. OCT. NOV. DEC. 3.8 9.1 7.6 12.2 14.3 9.0 -1.5 0.7 0.7 2.0 4.8 2.8 -3.3 -2.1 -1.7 -1.5 1.5 0.6 -9.5 -4.5 -9.5 0.3 -9.5 -6.5 -3.0 -0.2 -1.2 1.8 2.3 1.1 1.2 -1.5 -2.6 0.8 3.1 -0.3 0.3 1.3 5.3 7.1 7.4 6.2 12.3 15.3 12.3 13.3 11.3 7.5 1.0 0.8 1.5 1.6 2.3 1.3 3.7 4.3 4.1 4.4 4.5 2.8 16.4 27.2 10.3 4.9 14.6 -3.1 11.6 3.2 9.6 -0.6 -2.0 0.5 -3.8 -1.3 -1.5 3.3 -4.5 -4.5 -4.8 -4.0 -6.2 -8.2 -3.0 -13.4 -15.1 -6.4 -7.5 -4.3 1.2 7.4 -2.8 -4.2 -0.7 -4.4 -1.8 -1.5 7.0 1.8 -2.2 -2.3 2.3 3.3 0.2 2.7 5.3 -0.8 1.8 -0.3 6.0 7.0 15.0 13.1 12.7 15.1 2.1 3.8 2.3 2.7 2.7 2.2 3.0 4.6 5.5 5.3 5.2 5.5 939.0 942.8 954.3 951.8 961.0 3473.9 3468.1 3469.5 3458.6 3454.9 2534.9 2525.3 2515.2 2506.8 2493.9 716.6 707.6 703.8 699.4 696.9 4190.5 4175.7 4173.3 4158.0 4151.8 5019.4 5010.3 5000.7 5010.3 2854.8 2867.5 2865.5 2869.7 2868.9 2832.2 2863.2 2893.4 2929.9 8494.3 8513.3 8532.2 8547.7 11326.5 11376.6 11425.5 11477.7 6 13 20 27 p 959.6 956.3 961.0 962.3 3455.8 3454.4 3452.2 3454.7 2496.2 2498.1 2491.1 2492.4 679.9 701.7 702.2 700.1 4135.7 4156.2 4154.4 4154.9 3 p 966.8 3457.1 2490.3 699.1 4156.2 ANN. GROWTH RATES () ANNUALLY (Q4 TO Q4) 1989 1990 1991 1992-JAN. FEB. MAR. APR. MAY JUNE JULY p LEVELS ($BILLIONS) MONTHLY 1992-MAR. APR. MAY JUNE JULY p MEEKLY 1992-JULY AUG. : : 1. Adjusted for breaks caused by reclassifications. 2. 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)FOMC Class Components of Money Stock and Related Measures seasonally adjusted unless otherwise noted Currency Demand deposits Other checkable deposits Overnight RPs and Eurodollars NSA' Savings deposits' 1 2 3 4 5 ANNUALLY (4TH QTR.) 1989 1990 1991 221.2 245.5 266.0 279.2 277.5 287.0 282.8 292.7 329.1 76.2 78.8 72.6 MONTHLY 1991-JULY Period Small denomination time deposits' 6 Money market mutual funds general Institupurpose tions and broker/ only dealer' 7 8 AUG. 17, 1992 Large denomination time deposits' Term RPs NSA' Term Eurodollars NSA' Savings bonds Shortterm Treasury securities Commercial paper' Bankers acceptances 9 10 11 12 13 14 15 LEVELS I$BILLIONS) : 1. 2. 3. 4. 5. 884.7 919.9 1028.8 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 73.3 78.8 68.0 60.5 116.8 125.2 137.0 320.3 331.1 321.4 349.1 357.4 337.9 40.3 33.6 24.4 259.3 279.3 313.7 64.8 986.1 1129.5 367.9 155.4 471.2 AUG. 78.8 62.7 133.5 332.8- 339.8 28.1 261.3 280.1 317.3 67.3 994.1 1120.8 362.4 158.6 465.5 78.4 63.6 134.4 330.6 336.3 27.2 SEP. 262.9 280.6 320.6 66.4 1002.4 1111.0 359.9 162.6 458.5 76.7 61.5 135.2 322.9 337.7 25.8 OCT. NOV. DEC. 264.8 266.0 267.3 283.8 287.6 289.5 324.5 329.7. 333.2 69.4 73.0 75.3 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 73.6 70.9 62.8 61.5 57.2 136.1 137.1 137.9 321.5 324.7 317.9 336.2 337.9 339.7 25.3 24.5 23.3 1992-JAN. FEB. MAR. 269.4 271.6 271.8 293.9 305.1 309.6 339.0 346.3 349.5 76.6 76.4 73.1 1061.2 1083.9 1098.0 1042.9 1019.8 1002.9 360.1 363.9 358.0 182.4 188.2 185.3 427.9 420.7 413.0 70.8 72.0 73.7 55.3 55.9 57.9 138.9 140.1 141.2 311.5 321.2 328.6 334.8 327.5 337.0 23.2 22.9 22.2 APR. MAY JUNE 273.6 274.7 276.2 311.2 315.1 311.0 350.0 356.5 356.7 70.8 66.9 68.4 1111.2 1122.4 1127.0 985.6 969.1 956.3 354.1 355.0 353.3 189.2 194.8 199.7 405.7 400.9 396.2 72.3 71.6 70.0 55.0 52.7 51.3 142.4 143.5 144.6 328.8 332.5 338.6 341.7 329.4 347.1 21.6 22.0 22.0 JULY p 278.9 315.6 358.7 67.9 1134.3 941.7 349.8 207.7 389.8 67.2 50.2 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 NET CHANGES IN SYSTEM HOLDINGS OF SECURITES Millions of dollars, not seasonally adjusted August 14, 1992 Treasury bills Nt SR Net 2 purchases s mp Redemptions (-) 1,468 17,448 20,038 12,730 4,400 1,000 -11,263 13,048 19,038 327 425 3,1043 946 50 6,583 2,160 4,356 7,664 5,858 1,000 ---02 ---03 ---04 1,160 4,356 7,664 5,858 300 900 1,165 178 2,950 550 650 2,433 1992 ---Q1 ---02 -1,000 4,415 1,600 -2,600 4,415 Period 1989 1990 1991 1991 ---Q1 1991 August September October November December 1992 January February March April May June July 5,776 529 2,198 2,823 837 -1,628 123 505 1,600 Net change yea 1-5 - Treasurycoupons rhass 3 over 10 5-10 2,452 2,278 5,776 529 2,198 2,823 837 2,133 300 -3,228 123 505 1,027 1,425 258 -100 1,280 597 STRICTLY CONFIDENTIAL (FR) CLASS II-FOMC 1 Redemptions (-) Net Change 284 -1,683 11,128 -1,614 ------- 4,150 1,450 1,815 3,867 5,310 5,698 9,419 7,299 -16,864 992 152 14,106 ----- 2,452 3,730 -233 7,896 -14,636 1,137 340 850 6,116 1,374 2,185 4,022 1,092 -2,134 2,216 6,942 -8,871 16,035 -3,313 1,150 1,930 -49 4,149 3,796 -85 -12,874 -2,010 248 345 -1,203 1,996 -914 3,567 300 ----- ----- 1,027 1,425 ... 4,110 306 4,110 306 ----- 2,278 5 Net RPs -10,390 13,240 27,726 ----- 650 Net change outright holdings total 4 1,315 375 11,282 375 655 Federal agencies redemptions (') 200 3,530 Weekly April 29 May 6 13 20 27 June 3 10 17 24 July 1 8 15 22 29 August 5 12 Memo: LEVEL (bil. $)6 August 12 668 3,442 306 668 3,442 306 200 200 2,278 3,530 707 3,411 3,836 -9 --- 90 90 140.6 1. Change from end-of-period to end-of-period. 2. Outright transactions in market and with foreign accounts. 3. Outright trahsactions in market and with foreign accounts, and short-term notes acquired in exchange for maturing bills. Excludes maturity shifts and rollovers of maturing issues. -20 -15 -50 -13 285 195 31.5 67.1 1,490 -598 3,639 -4,120 10,994 -6,274 -2,998 -1,690 5,070 -2,729 2,917 -3,023 3,007 -4,875 10,828 -10,190 16.1 25.5 140.2 286.5 -5.4 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 follows: .... 1 year 1 August 12 2.21 1-5 2.5 1 5-10 0.8 1 over 10 0.2 total 1 5.7 

Federal Reserve (1992, August 17). Bluebook. Bluebooks, Federal Reserve. https://whenthefedspeaks.com/doc/bluebook_19920818

@misc{wtfs_bluebook_19920818,
  author = {Federal Reserve},
  title = {Bluebook},
  year = {1992},
  month = {Aug},
  howpublished = {Bluebooks, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/bluebook_19920818},
  note = {Retrieved via When the Fed Speaks corpus}
}