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 Class I - FOMC (FR) December 17, 1993 MONETARY POLICY ALTERNATIVES Recent Developments (1) During the period since the November 16 FOMC meeting, the federal funds rate has averaged very close to the intended level of 3 percent.1 Most short-term interest rates were little changed 2 3 over the intermeeting period.2,3 Recent economic data have been interpreted by market participants as increasing the odds of a tightening of monetary policy, but not necessarily over the very near term. In longer-term markets, yields are up 10 to 15 basis points on balance. Rates were pushed up by signs of stronger economic growth and firming in some commodity prices, though that pressure was offset to some degree by declines in oil prices. Longer-term rates now stand 40 to 60 basis points above their mid-October lows. Over the inter- meeting period, most major stock price indexes fell 1 to 2 percent, but the Dow Jones Industrial Average rose about 1 percent on strong performances by a few firms to post new highs near the end of the period. (2) The dollar's weighted-average foreign exchange value showed little net change over the intermeeting period. It rose about 3 percent against the yen in light of deteriorating prospects for the 1. The allowance for adjustment and seasonal borrowing was reduced in two steps of $25 million each to $50 million during the intermeeting period, reflecting autumnal declines in the demand for seasonal credit. In the two maintenance periods ending since the November meeting, actual borrowing averaged somewhat below its allowance. Adjustment borrowing was quite low during the intermeeting period, setting a postwar weekly average low of $1.6 million in the week of December 8. 2. Market quotations are as of noon on Friday, December 17. 3. Premiums for year-end funding that are implicit in money market interest rates are down from 6 to 7 percentage points at the time of the last FOMC meeting to 1 to 3 percentage points most recently. Japanese economy and heightened expectations of further easing by the Bank of Japan. Stock prices in that country fell about 4 percent, and short- and long-term interest rates dropped 25 to 40 basis points. The dollar was about unchanged against the German mark, but declined somewhat against other European currencies. In Europe, interest rates generally decreased 10 to 50 basis points, about in line with market expectations, while stock prices continued to advance, with indexes in several countries reaching new highs. (3) Growth of M2 and M3 strengthened appreciably in November and, at rates of around 4-1/4 percent for both aggregates, was somewhat more rapid than projected by the staff in the last bluebook. Developments in the capital markets may have contributed to this pickup: Flows into longer-term mutual funds, probably responding to the capital losses associated with the decline in bond prices in late October and November, slowed appreciably during the weeks of November. Some of the unexpected strength in M2 and M3 was in money market mutual funds--a likely repository of funds for investors moving out of longer-term mutual funds. Ml growth in November was at a 10-1/2 percent rate, as projected in the last bluebook. Currency growth stayed near October's moderate rate; a considerable deceleration in this component over the past two months appears to be due in part to slower growth of foreign demands for U.S. currency. Mortgage refinancing activity likely helped fuel continued rapid expansion of 4. The strengthening of M2 showed through to M2+ (which adds bond and stock mutual funds to M2). M2+ is estimated to have expanded at a 7-1/2 percent rate last month, up from October's 6-1/4 percent pace. demand deposits last month.5 The strengthening of M3 owed to a surge in term Eurodollars as well as to the stepped-up growth in M2. (4) M2 and M3 in the fourth quarter are projected to be about 1-1/2 and 1/2 percent, respectively, above their average levels for the fourth quarter of 1992, leaving them both about 1/2 percentage point above the lower bounds of their downward-adjusted annual ranges. Although the growth rate of M2 was roughly the same as in 1992, its velocity rose less rapidly--at an estimated 3-1/2 percent in 1993, down from 5 percent in 1992.7 Moreover, some of the increase in velocity in 1993 can be explained by a rise in short-term opportunity costs, as deposit rates continued to adjust downward in response to previous declines in market interest rates. Thus, despite record growth of bond and stock mutual funds, there are some indications that the unusual shifts out of M2 may be beginning to abate, perhaps as portfolios become adjusted to the steep yield curve and the greater availability of mutual funds, as consumer loan rates come down, and as households become more comfortable with their financial positions. was Nonetheless, the rise in M2 velocity this year still greater than forecast by traditional models, and the level of M2 velocity in the fourth quarter of 1993 is 17 percent above the level 5. The monetary base expanded at an 8-3/4 percent rate last month, up a little from October's pace but down considerably from the thirdquarter rate. 6. At the July meeting, the range for M2 for 1993 was revised down 1 percentage point to 1 to 5 percent, while that for M3 was lowered 1/2 percentage point to 0 to 4 percent. A detailed analysis of the behavior of the aggregates in 1993 is contained in an appendix to the Greenbook. 7. Special factors, including increases in demand deposits related to prepayments of mortgages and heavy foreign demands for U.S. currency in the first three quarters, boosted growth of M2 in 1993 and depressed its velocity by an estimated 1 percentage point--the same as in 1992. 8. M2+ is projected to have expanded 5-1/2 percent during 1993. The velocity of this aggregate is expected to have fallen about 1/2 percent this year. these models expect, given the actual behavior of short-term opportunity costs. 9 The velocity of M3 also is projected to have risen less sharply in 1993 than last year. Contributing to the slower increase in V3 has been somewhat stronger credit growth at depositories, although this effect has been offset somewhat by an even greater reliance than last year on nondeposit sources of funds. (5) Nonfederal debt growth appears to be running somewhat stronger in the third and fourth quarters than previously thought, and, at a projected average rate of 4-3/4 percent over these two quarters, is noticeably above the pace of the first half of the year. The faster growth has been evident mainly in the household sector, where sounder balance sheets and perhaps less concern about economic prospects evidently have prompted a greater willingness to borrow. Consumer installment credit has been particularly robust, expanding at a 12-3/4 percent pace in October; bank data suggest that consumer borrowing fell off a bit last month but nevertheless remained well in excess of income growth. Mortgage borrowing is estimated to have picked up appreciably in the third quarter and to be continuing apace in the fourth quarter, reflecting strong housing activity as well as some equity extraction. In the business sector, however, net borrow- ing has remained quite modest. Internal funds have been nearly ample enough to cover the high level of capital outlays, and elevated share prices have induced many firms to tap equity markets. Gross issuance of corporate bonds has flagged in recent months, partly owing to the backup in long rates, while borrowing from shorter-term sources has remained subdued. The rise in long rates likewise has taken a toll on 9. M2 velocity in 1993 increased by 2 percentage points more than would have been predicted by the new broader model of M2 demand that includes rates on intermediate-term securities and consumer loans. -5- bond issuance in the state and local sector. Federal debt, though, rebounded in November from a decline in October, bringing estimated total debt growth last month to a 6-1/2 percent rate. Through Novem- ber, total domestic nonfinancial sector debt is estimated to have risen at a 5 percent rate from its 1992:Q4 base, leaving this aggregate somewhat above the 4 percent lower bound of its monitoring range. MONEY, CREDIT, AND RESERVE AGGREGATES (Seasonally adjusted annual rates of growth) Sep. Oct. Nov. QIV to Nov. M1 13.6 10.4 10.5 10.7 M2 4.1 0.7 4.3 1.5 M3 3.6 1.9 4.2 0.7 5.3 3.7 6.4 4.9 7.1 4.6 -1.5 5.6 9.3 5.3 8.3 3.7 4.0 0.0 6.3 4.7 Nonborrowed reserves 2 15.2 23.1 16.8 12.7 Total reserves 16.6 20.0 12.7 12.6 Monetary base 15.1 7.9 8.8 10.6 428 285 89 1090 1089 1093 Money and credit aggregates Domestic nonfinancial debt Federal Nonfederal Bank credit Reserve measures Memo: (Millions of dollars) Adjustment plus seasonal borrowing Excess reserves 1. 2. Data for November debt measures are partly projected. 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) consideration. Three alternatives are presented below for Committee Under alternative B, federal funds would continue to trade around 3 percent in association with adjustment plus seasonal borrowing at the discount window of $50 million. Under alternative C, the federal funds rate would move up to 3-1/2 percent and the borrowing allowance to $75 million. In the case of alternative A, the federal funds rate would decline to 2-1/2 percent and borrowing would fall, perhaps to $25 million. (7) Alternative B is consistent with the policy assumptions underlying the staff economic forecast. In that forecast, short-term rates are maintained at around current levels through most of 1994. The spurt in output in the current quarter, related importantly to production adjustments in the automobile industry, is not sustained. Output decelerates in the first quarter, and then settles into a growth pace broadly in line with that of potential over the balance of the year, held down to an extent by scheduled fiscal retrenchment. With economic slack persisting, albeit at around the current diminished level, prices decelerate modestly further. Relative to the staff forecast, market participants appear to be anticipating a bit more strength in aggregate demand through next year, and have built into interest rates substantial odds that policy will begin to tighten in the first part of the year to keep inflation from increasing. Nonetheless, market interest rates are unlikely to move down much on balance under the steady funds rate of alternative B in coming months, since the market would continue to expect a tightening before long. The foreign exchange value of the dollar under alternative B should stay around current levels. Alt. A Alt. B Alt. C Growth from November to March M2 M3 M1 2-1/4 1-1/4 6-1/2 2 1 6 1-3/4 3/4 5-1/4 Implied growth from 1992: Q4 to March M2 M3 M1 2-1/2 1-1/2 7 2 1-1/4 6-1/2 1-3/4 1 5-3/4 (8) Growth of the broad monetary aggregates, shown in the table above, is expected to slow a little through March under alternative B from the faster pace of recent months, but to stay above the pace of 1993 as a whole. This moderation is entirely accounted for by identifiable special factors. In particular, the recent falloff in mortgage refinancing applications portends a marked reduction in demand deposits associated with this activity. This effect subtracts around 3 percentage points from the expansion of M1 and 1 percentage point from M2 over the November-to-March period. (Increases in refinancing over the summer and early fall added an estimated 1-3/4 and 1/2 percentage points of growth to M1 and M2 from August to November.) Abstracting from this factor, growth of M2 is projected to pick up a little in coming months. Shifts from M2 should continue to moderate a little as balance sheets become better aligned with the current structure of interest rates. We expect flows into long-term mutual funds to average below the record pace of most of 1993, reacting also to heightened investor perceptions of risk after the backup in yields and associated capital losses of October and November. Alternative Levels and Growth Rates for Key Monetary Aggregates M2 Alt. A Levels in Billions Sep-93 Oct-93 Nov-93 Dec-93 Jan-94 Feb-94 Mar-94 Monthly Growth Rates Sep-93 Oct-93 Nov-93 Dec-93 Jan-94 Feb-94 Mar-94 3533.1 3535.2 3547.8 3556.2 3563.6 3569.9 3575.5 M3 Alt. B 3533.1 3535.2 3547.8 3556.2 3561.8 3566.9 3571.6. Alt. C Alt. A M1 Alt. B Alt. C Alt. A Alt. B Alt. C 3533.1 3535.2 3547.8 3556.2 3560.0 3563.9 3567.7 4178.2 4184.9 4199.5 4204.8 4207.7 4211.5 4215.6 4178.2 4184.9 4199.5 4204.8 4206.6 4209.7 4212.9 4178.2 4184.9 4199.5 4204.8 4205.5 4207.9 4210.2 1106.5 1116.1 1125.9 1129.7 1137.4 1144.2 1150.6 1106.5 1116.1 1125.9 1129.7 1136.3 1142.3 1148.1 1106.5 1116.1 1125.9 1129.7 1135.2 1140.4 1145.6 4.1 0.7 4.3 2.8 2.5 2.1 1.9 4.1 0.7 4.3 2.8 1.9 1.7 1.6 4.1 0.7 4.3 2.8 1.3 1.3 1.3 3.6 1.9 4.2 1.5 0.8 1.1 1.2 3.6 1.9 4.2 1.5 0.5 0.9 0.9 3.6 1.9 4.2 1.5 0.2 0.7 0.7 13.6 10.4 10.5 4.1 8.2 7.2 6.7 13.6 10.4 10.5 4.1 7.0 6.4 6.1 13.6 10.4 10.5 4.1 5.8 5.6 5.5 Quarterly Averages 93 Q1 93 Q2 93 Q3 93 Q4 94 Q1 -1.9 2.2 3.2 2.6 2.6 -1.9 2.2 3.2 2.6 2.3 -1.9 2.2 3.2 2.6 2.0 -3.9 2.3 1.2 2.7 1.4 -3.9 2.3 1.2 2.7 1.3 -3.9 2.3 1.2 2.7 1.1 6.5 10.5 12.9 10.5 7.2 6.5 10.5 12.9 10.5 6.5 6.5 10.5 12.9 10.5 5.9 Growth Rate From To Sep-93 Dec-93 Dec-93 Mar-94 Nov-93 Mar-94 2.6 2.2 2.3 2.6 1.7 2.0 2.6 1.3 1.7 2.5 1.0 1.2 2.5 0.8 1.0 2.5 0.5 0.8 8.4 7.4 6.6 8.4 6.5 5.9 8.4 5.6 5.2 Nov-93 Dec-93 Jan-94 Feb-94 Mar-94 1.5 1.7 2.9 2.7 2.5 1.5 1.7 2.6 2.3 2.1 1.5 1.7 2.3 2.0 1.8 0.7 0.7 1.6 1.4 1.4 0.7 0.7 1.5 1.3 1.2 0.7 0.7 1.3 1.1 1.0 10.7 10.2 7.2 7.2 7.1 10.7 10.2 6.6 6.5 6.5 10.7 10.2 6.0 5.9 5.8 91 Q4 92 Q4 93 Q4 2.8 1.7 1.5 2.8 1.7 1.5 2.8 1.7 1.5 1.1 0.2 0.6 1.1 0.2 0.6 1.1 0.2 0.6 8.0 14.3 10.5 8.0 14.3 10.5 8.0 14.3 10.5 92 92 93 93 93 Q4 Q4 Q4 Q4 Q4 90 Q4 91 Q4 92 Q4 Chart 1 ACTUAL AND TARGETED M2 Billions of Dollars -* 3750 Actual Level Short-Run Alternatives -- 3700 The range for 1994 is the provisional range adopted at the July meeting. --1 3650 -- 3600 -- 3550 -- 3500 I I I I I I I I I I I I I I I I I I I I I I I I I I ONDJ F M A M J J 1993 A S O N D J F M A M J J 1994 A S O N 3450 D Chart 2 ACTUAL AND TARGETED M3 Billions of Dollars -* S 4400 Actual Level Short-Run Alternatives 4350 The range for 1994 is the provisional range adopted at the July meeting. -1 4300 4250 SA B --- 4200 - I I 1 11I OND J F I M A I I I I M J J 1993 A I I I I I I I I S O N D J F M A M J J 1994 I I I I A S O N 4150 - D 4100 Chart 3 M1 Billions of Dollars S 1320 15% -Actual Level * Short-Run Alternatives S'-1300 - 1280 -1260 10% - 1240 -1220 -1200 5% 1180 .. . .-. .... .... .. - ..- °**- --- 1160 1140 1120 1100 5% 1080 . 1060 1040 1020 1 I I I I I I I I I I I I I I I I I I I I I I I I I I O N D J F M A M J J 1993 A S O N D J F M A M J J 1994 A S O B N D 1000 Chart 4 Debt Billions of Dollars 13400 8% * Actual Level (November level partly projected.) Projected Level - 13200 The range tor 1994 is the provisional range adopted at the July meeting. - . - -13000 12800 .4% 8% - ..-** ..- S.- - - - 12600 - 12400 4 12200 *- 12000 - 11800 11600 ONDJ FMAM J JASO 1993 NDJ F M A M J JASO 1994 ND (9) Nonetheless, substantial portfolio shifts are expected to persist, as the yield curve remains relatively steep, and these shifts will continue to damp the growth of M2 relative to nominal income. The velocity of M2 in the first quarter would rise at a 4 percent rate, down only a bit from the 4-1/2 percent rate projected for the current quarter. M2 by March would have expanded at a 2 per- cent annual rate from its fourth-quarter 1993 base under alternative B, placing this aggregate well above the lower end of its provisional 1 to 5 percent growth range for next year. However, monthly money growth in the first quarter could be especially volatile and difficult to interpret. Seasonal factors were distorted by policy-induced surges in money in early 1991 and 1992. In addition, amounts and patterns of tax payments, and associated adjustments in money holdings, could be atypical, given the uncertain effects of the new tax law. (10) Under alternative B, M3 would advance at a 1 percent annual rate over the November-to-March period; by March this aggregate would be 1-1/4 percent above its fourth-quarter 1993 base, well within its 0 to 4 percent provisional range for 1994. Bank credit should continue to expand around the 5 percent pace of 1993, and banks are expected to persist in funding much of the growth with lower cost, non-M3 sources, in part to avoid deposit insurance premiums. The debt of the nonfederal sectors will grow at a 4-3/4 percent rate through March, in line with the stepped-up pace of the second half of 1993. Household borrowing is expected to continue to be strong, reflecting more comfortable financial positions and the high level of spending on housing and durable goods. Overall financing needs of businesses are expected to grow as advances in capital spending outstrip growth in internal funds, and as net equity issuance is held down by a major -11merger. Total debt of nonfinancial sectors is projected to increase at a 5-3/4 percent pace from the fourth quarter of 1993 to March, well above the lower end of its provisional 4 to 8 percent range for next year. (11) The rise in the federal funds rate under alternative C, to 3-1/2 percent, would come sooner than now anticipated by market participants and built into markets interest rates. Rates at the near end of the maturity spectrum would rise by almost the full 50 basis point increase in the funds rate; would go up, but as usual by less. intermediate- and long-term rates The extraordinary spread of the prime rate over funding costs and the more aggressive lending posture of commercial banks suggest that the prime rate might notch up only 1/4 percentage point. The eventual increase in long-term rates could be limited because such a tightening at this time might be seen as better ensuring continuing moderate expansion and disinflation in the years ahead. Quality spreads would be expected to remain fairly nar- row as a firming in the policy stance in the context of market expectations of a more solid economic expansion would not be likely to raise many concerns about credit quality. Higher yields on dollar assets would put upward pressure on the exchange value of the dollar. M2 would grow at a 1-3/4 percent annual rate over the November-toMarch period, restrained by higher opportunity costs. M3 would expand under alternative C at only a 3/4 percent pace over the November-toMarch period. (12) Alternative C might be preferred if there were concerns about the inflation outlook. Such concerns could arise from a view that current-quarter strength in economic activity suggested that the economy was on an appreciably higher growth track, perhaps because financial factors damping expansion have faded, allowing the current accommodative stance of monetary policy to show through more fully into aggregate demand. In that event, the output gap would be closing more quickly than in the staff forecast, raising the risks of an overshooting of activity relative to its potential and hence greater inflationary pressures over time. A timely firming in policy now could obviate a more aggressive tightening later to keep inflation from picking up, involving perhaps even higher real interest rates if delays permitted inflation expectations to deteriorate. (13) The easing of policy under alternative A would come as a surprise to market participants, and short-term interest rates would fall by about the 50 basis point drop in the federal funds rate. Intermediate- and long-term rates would decline by less; indeed, the extent of any decline would be quite limited if the easing were seen by market participants to be unsustainable. on foreign exchange markets. The dollar would weaken Under alternative A, M2 would expand at a 2-1/4 percent pace, close to that evident since midyear, buoyed partly by less of a slowdown in M1 than under alternatives B and C, M3 would grow at a 1-1/4 percent pace from November to March. (14) Alternative A might be favored if the current strength in the economy were seen as likely to give way to a significant weakening in the pace of expansion next year, considering the greater fiscal restraint in train and the backup in long-term interest rates and the dollar since mid-October. Moreover, even if the staff fore- cast is judged to be the most likely outcome, the lack of much progress in reducing the unemployment rate may be deemed to be unacceptable. Moreover, recent softness in the oil market could suggest lessened risk to the inflation outlook from an easing, at least in the near term. -13Directive Language (15) Presented below is draft wording for the operational paragraph that includes the usual options for Committee consideration. OPERATIONAL PARAGRAPH In the implementation of policy for the immediate future, the Committee seeks to DECREASE SOMEWHAT/maintain/INCREASE SOMEWHAT pressure on reserve positions. the existing degree of 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 intermeet- ing period. The contemplated reserve conditions are expected to be consistent with [DEL: modest] MODERATE growth in M2 and M3 over COMING MONTHS [DEL: the balance of the year.] December 20, 1993 SELECTED INTEREST RATES (percent) Short-Term federal funds Treasury bills secondary market 3-month I 6-month I 1-year Long-Term CDs secondary market 3-month comm. paper 1-month money market mutual fund bank prime loan U.S. government constant maturity yields 3-year 10-year 30-year 11 2 3 4 5 6 7 8 9 10 11 92 -- High -- Low 4.20 2.86 4.05 2.69 4.22 2.82 4.51 2.91 4.32 3.07 5.02 3.17 4.51 2.74 6.50 6.00 6.32 4.24 7.65 6.30 93 -- High -- Low Monthly Dec 92 3.24 2.87 3.12 2.82 3.27 2.94 3.48 3.07 3.36 3.06 3.44 3.07 2.92 2.59 6.00 6.00 5.06 4.07 2.92 3.22 3.36 3.55 3.48 3.71 2.82 6.00 Jan Feb Mar Apr ay Jun Jul Aug Sep Oct Nov Weekly Sep Sep Sep Sep Sep 3.02 3.03 3.07 2.96 3.00 3.04 3.06 3.03 3.09 2.99 3.02 3.00 2.93 2.95 2.87 2.96 3.07 3.04 3.02 2.95 3.02 3.10 3.14 3.07 3.05 2.97 3.07 3.20 3.16 3.14 3.06 3.12 3.26 3.35 3.25 3.20 3.11 3.23 3.39 3.33 3.30 3.22 3.25 3.42 3.19 3.12 3.11 3.09 3.10 3.21 3.16 3.14 3.12 3.24 3.35 3.21 3.14 3.15 3.13 3.11 3.19 3.15 3.14 3.14 3.14 3.15 2.83 2.72 2.66 2.65 2.62 2.62 2.64 2.64 2.65 2.65 2.66 93 93 93 93 93 93 93 93 93 93 93 corporate conventional home mortgages A-utility municipal secondary primary recently Bond market market offered Buyer fixed-rate fixed-rate I ARM 12 13 14 15 16 8.07 7.29 8.99 8.06 6.87 6.12 9.09 7.73 9.03 7.84 6.22 4.97 6.73 5.24 7.46 5.83 8.28 6.79 6.44 5.41 8.17 6.72 8.14 6.74 5.36 4.14 5.21 6.77 7.44 8.27 6.43 8.22 8.22 5.45 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 4.93 4.58 4.40 4.30 4.40 4.53 4.43 4.36 4.17 4.18 4.50 6.60 6.26 5.98 5.97 6.04 5.96 5.81 5.68 5.36 5.33 5.72 7.34 7.09 6.82 6.85 6.92 6.81 6.63 6.32 6.00 5.94 6.21 8.13 7.80 7.61 7.66 7.75 7.59 7.43 7.16 6.94 6.91 7.25 6.40 6.12 5.85 5.99 5.92 5.87 5.80 5.67 5.50 5.48 5.71 8.03 7.65 7.57 7.46 7.48 7.41 7.19 7.05 6.89 6.85 7.32 8.02 7.68 7.50 7.47 7.47 7.42 7.21 7.11 6.92 6.83 7.16 5.23 4.98 4.79 4.71 4.65 4.64 4.56 4.48 4.36 4.25 4.24 1 8 15 22 29 93 93 93 93 93 3.08 2.99 3.03 3.12 3.05 3.01 2.96 2.97 2.94 2.92 3.11 3.05 3.07 3.07 3.05 3.23 3.16 3.22 3.26 3.23 3.13 3.11 3.12 3.12 3.10 3.13 3.13 3.13 3.14 3.16 2.64 2.64 2.64 2.65 2.65 6.00 6.00 6.00 6.00 6.00 4.19 4.07 4.17 4.21 4.17 5.45 5.30 5.33 5.42 5.35 6.10 5.93 5.94 6.07 6.01 6.83 6.85 6.99 7.07 6.95 5.52 5.44 5.49 5.51 5.53 6.82 6.91 6.88 6.94 6.95 6.93 6.82 6.96 6.95 6.89 4.40 4.33 4.36 4.34 4.29 Oct Oct Oct Oct 6 13 20 27 93 93 93 93 3.24 2.91 2.97 2.97 2.95 3.00 3.03 3.06 3.06 3.09 3.11 3.17 3.23 3.21 3.24 3.30 3.24 3.22 3.22 3.26 3.16 3.15 3.13 3.14 2.68 2.64 2.65 2.64 6.00 6.00 6.00 6.00 4.18 4.12 4.11 4.24 5.36 5.28 5.24 5.42 6.01 5.94 5.83 5.98 6.93 6.79 6.97 6.97 5.52 5.41 5.44 5.56 6.78 6.72 6.87 6.94 6.87 6.81 6.74 6.86 4.28 4.33 4.14 4.19 Nov Nov Nov Nov 3 10 17 24 93 93 93 93 3.04 2.96 3.03 2.98 3.07 3.09 3.10 3.12 3.22 3.25 3.24 3.27 3.37 3.40 3.39 3.47 3.34 3.36 3.34 3.35 3.15 3.15 3.15 3.14 2.66 2.65 2.67 2.67 6.00 6.00 6.00 6.00 4.39 4.49 4.45 4.55 5.54 5.70 5.67 5.82 6.03 6.20 6.17 6.31 7.25 7.23 7.37 7.27 5.72 5.69 5.70 5.74 7.26 7.24 7.38 7.38 7.11 7.12 7.08 7.31 4.17 4.28 4.20 4.30 Dec Dec Dec 1 93 8 93 15 93 3.09 2.92 2.94 3.12 3.10 3.05 3.27 3.26 3.24 3.46 3.44 3.47 3.35 3.35 3.26 3.15 3.44 3.36 2.69 2.69 2.69 6.00 6.00 6.00 4.53 4.53 4.55 5.80 5.75 5.77 6.27 6.21 6.23 7.24 7.24 -- 5.71 5.53 5.62 7.37 7.17 -- 7.25 7.14 7.17 4.31 4.25 4.20 Daily Dec Dec Dec 10 93 16 93 17 93 2.90 3.03 3.05 3.03 3.24 3.23 3.48 3.46 3.27 3.22 3.36 3.33 6.00 6.00 4.53 4.58 5.73 5.84 6.19 6.31 - L -- p-- -- -- -- NOTE: Weekly data for columns 1through 11are 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 isthe 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)Class II FOMC Money and Credit Aggregate Measures DECEMBER 20,1993 Seasonally adjusted Period Annual growth rates(%): Annually (Q4 to Q4) 1990 1991 1992 M1 M2 1 2 Money stock measures and liquid assets Bank credit nontransactions componentstot lo s total loans and investments' In M2 In M3 only 3 4 M3 L 5 6 US. 2 government 7 2 other total' 9 10 4.3 8.0 14.3 4.0 2.8 1.7 3.9 1.1 -2.7 -6.5 -6.2 -6.7 1.8 1.1 0.2 2.0 0.3 1.3 5,6 3.4 3.8 10.2 11.3 10.7 5.5 2.6 3.1 6.6 4.6 5.0 Quarterly Average 1992-4th QTR. 1993-lst QTR. 1993-2nd QTR. 1993-3rd QTR. 16.8 6.5 10.5 12.9 2.6 -1.9 2.2 3.2 -3.0 -5.4 -1.4 -1.1 -15.0 -14.0 3.3 -9.0 -0.4 -3.9 2.3 1.2 1.4 -2.4 3.3 1.3 4.1 1.8 6.1 7.2 6.7 7.6 10.4 9.1 3.4 2.7 2.4 4.4 4.2 4.0 4.5 5.7 Monthly 1992-NOV. DEC. 15.6 8.8 2.1 -0.5 -3.3 -4.3 -15.2 -20.7 -0.7 -3.8 2.2 -2.0 2.7 2.2 7.2 13.8 3.0 2.8 4.1 5.7 7.7 -0.2 2.6 9.0 27.3 7.2 13.3 10.1 13.6 10.4 10.5 -3.2 -4.0 -0.9 0.6 10.5 2.5 1.9 1.6 4.1 0.7 4.3 -7.7 -5.6 -2.4 -2.9 3.2 0.4 -3.2 -2.2 -0.1 -3.7 1.4 -28.9 10.3 -4.0 15.8 -2.5 -14.5 -14.9 -3.0 1.1 8.4 3.9 -7.3 -1.7 -1.4 3.0 8.4 -0.2 -0.7 0.9 3.6 1.9 4.2 -5.8 -0.9 -0.2 3.8 9.4 0.5 -0.8 3.0 -2.6 3.5 -1.2 3.3 6.3 4.2 8.2 9.3 9.1 3.3 4.0 0.0 6.3 4.0 4.7 11.8 10.7 10.2 12.2 7.3 8.7 7.1 -1.5 3.7 1.6 1.3 2.5 2.5 4.3 5.2 4.3 4.6 5.6 3.8 2.4 4.0 4.7 4.6 6.4 5.7 5.5 5.3 3.7 1085.0 1094.1 1106.5 1116.1 1125.9 3516.3 3521.1 3533.1 3535.2 3547.8 2431.3 2426.9 2426.6 2419.1 2422.0 646.1 644.5 645.1 649.6 651.7 4162.4 4165.6 4178.2 4184.9 4199.5 5064.3 5076.9 5065.9 5080.6 3037.9 3046.3 3056.4 3056.4 3072.5 3227.6 3251.1 3270.4 3266.3 8805.9 8837.3 8871.2 8912.7 12033.4 12088.3 12141.6 12178.9 1 8 15 22 29 p 1118.4 1118.8 1123.0 1124.3 1127.2 3528.9 3539.8 3546.9 3547.6 3547.5 2410.5 2421.1 2423.9 2423.3 2420.2 646.9 648.2 650.7 654.4 654.4 4175.8 4188.0 4197.6 4202.0 4201.8 6 p 1129.6 3558.8 2429.2 649.7 4208.6 1993-JAN. FEB. MAR. APR. MAY JUNE JULY AUG. SEP. OCT. NOV. p Levels ($Billions): Monthly 1993-JULY AUG. SEP. OCT. NOV. p Weekly 1993-NOV. DEC. 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 pe Domestic nonfinancial debt1 preliminary preliminary estimate Strictly Confidential (FR)Class II FOMC Components of Money Stock and Related Measures DECEMBER 20, 1993 Seasonally adjusted unless otherwise noted Period Currency Other checkable deposits Depoand deposits Overnight RPs and Eurodollars Savings deposits NSA' 1 2 Levels ($Billions) Annually (4th Qtr.) 1990 1991 1992 3 3 4 5 Small denominaton time a deposits 6 Money market mutual funds general purpose Institutions and l oy broker/ dealer .7 8 Large denomination time deposits 9 Term RP's NSA' Term dEuo Savings s Short-term Treasury resces aerial Bankers an NSA' 10 1 1 12 13 1 14 15 15 245.4 265.8 290.0 277.7 287.0 338.8 293.1 329.6 380.2 78.8 73.4 75.4 919.8 1028.8 1179.0 1171.6 1081.0 880.3 348.2 362.9 344.1 131.5 175.6 207.5 496.9 432.3 360.8 68.0 60.7 47.0 125.2 137.0 154.5 329.9 319.4 325.6 356.2 336.3 369.6 36.3 24.4 20.4 289.8 292.3 339.5 340.8 381.6 385.2 75.8 74.7 1180.4 1186.0 879.3 867.3 343.7 342.3 209.2 202.3 360.2 355.7 47.2 45.6 154.7 156.8 325.1 331.4 372.4 368.4 20.3 20.4 294.8 296.9 299.0 341.9 341.8 341.9 388.6 386.4 386.3 73.2 74.0 74.4 1184.4 1182.4 1178.8 858.3 853.1 848.1 340.0 333.2 332.7 197.7 201.9 200.9 348.5 344.0 338.1 43.5 46.7 49.8 158.9 161.1 162.7 337.5 342.9 341.6 360.7 355.9 360.3 20.6 20.2 19.3 APR. MAY JUNE 301.4 304.0 306.8 347.2 359.1 360.5 386.2 395.5 397.8 72.6 70.0 73.5 1181.6 1193.7 1198.8 841.1 834.2 826.6 331.5 336.4 336.2 200.4 202.8 198.1 343.2 343.1 339.8 48.7 48.7 45.5 163.9 164.8 165.7 340.7 347.1 349.1 365.5 368.4 369.1 19.3 19.4 18.7 JULY AUG. SEP. 309.6 312.6 316.4 365.6 370.7 376.4 401.9 403.1 406.0 75.6 78.3 81.6 1200.1 1205.1 1208.7 817.6 810.1 803.4 335.9 334.2 332.4 195.0 193.3 194.1 335.2 335.4 333.8 41.9 44.1 45.3 166.8 167.8 168.8 348.5 345.7 323.5 369.1 381.4 379.5 17.5 16.4 15.9 OCT. NOV. p 318.2 319.9 379.9 385.3 410.2 412.7 84.0 85.3 1209.6 1214.6 795.8 788.2 332.9 336.4 196.6 196.7 334.4 332.6 46.0 51.1 169.8 318.9 391.5 15.5 Monthly 1992-NOV. DEC. 1993-JAN. FEB. MAR. 1. 2. 3. 4. 5. 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, depository institutions, U.S. government, and foreign banks and official institutions. p preliminary December 17,1993 Treasury bills Period Net 2 purchases Redemptions (-) Net change Treasurycoupons Net purchases 3 puas over 10 1-5 5-10 w 1 17,448 20,038 13,086 13,048 19,038 11,486 -1,000 4,415 867 8,805 425 3,043 1,096 1992 December Redemptions (- 50 6,583 13,118 -100 1,280 2,818 375 2,333 -2,600 4,415 867 8,805 2,452 2,193 3,900 4,572 597 945 1,276 655 731 947 1,441 2,490 3,700 716 1,147 1,297 705 1,110 817 200 100 1993 ---Q1 ---02 ---Q3 STRICTLY CONFIDENTIAL (FR) CLASS II-FOMC NET CHANGES IN SYSTEM HOLDINGS OF SECURITES1 Millions of dollars, not seasonally adjusted 7,749 1,268 --- 7,749 1,268 3,669 - 3,669 - Federal agencies redemptions Net Change ) Net change outright holdings total 4 375 11,282 19,365 13,240 27,726 30,219 11,128 -1,614 -13,215 2,452 3,730 5,927 7,256 -233 7,896 6,617 15,939 -14,636 1,137 14,195 -13,912 --- 3,141 --- 4,990 --- 6,326 2,851 12,648 7,067 -461 10,624 -8,644 300 3,848 2,929 -103 -85 3,039 5,083 308 7,258 -166 2,577 4,656 857 6,016 -6,128 4,788 879 -5,514 4,112 12,027 -14,435 4,528 1,262 -6,723 7,232 4,036 63 -3,206 1,867 18,292 -15,535 -6,182 472 1,314 -1,910 -2,301 3,738 89 3,880 -4,174 -8,794 7,336 --------- 1993 January February 3,141 4,990 March April May June 121 349 7,280 121 349 7,280 902 366 1,396 5,931 902 366 927 5,931 10 63 10 63 65 304 82 281 361 1,235 3,859 273 496 665 174 413 65 304 82 -188 361 1,235 3,859 273 496 665 174 413 200 1,800 4,326 July August September October November Weekly September 8 15 22 29 October 6 13 20 27 November 3 10 17 24 December 1 8 15 Memo: 100 --- JU 230 404 77 -218 326 1,335 3,859 273 496 650 4,816 413 --- - 189 4,026 100 --- 100 2,619 1,008 79.3 24.7 Net RPs 826 LEVEL (bil. $)6 December 15 167.1 198.8 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. 31.7 334.5 -4.3 343.5 4. Reflects net change in redemptions (-) of Tretasury and agency securities. 5. Includes change in RPs (+), matched sale-pi urchase transactions (-), and matched purchase sale transactions (+). 6. The levels of agency issues were as follows: December 15 within 1 year 1.9 1-5 2.1 5-10 0.6 over 10 0.1 total 47 

Federal Reserve (1993, December 20). Bluebook. Bluebooks, Federal Reserve. https://whenthefedspeaks.com/doc/bluebook_19931221

@misc{wtfs_bluebook_19931221,
  author = {Federal Reserve},
  title = {Bluebook},
  year = {1993},
  month = {Dec},
  howpublished = {Bluebooks, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/bluebook_19931221},
  note = {Retrieved via When the Fed Speaks corpus}
}