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 C onfide ntial (F.R.) Class II – FOMC May 10, 2001 M ONETARY P OLICY A LTERNATIVES Recent D evelopm ents (1) The 50-basis-point reduction in the target federal funds rate at the March 20 meeting was less than some investors had expected, but the accompanying statement contributed to expectations that an intermeeting ease would follow.1 Those expectations gradually diminished over subsequent weeks as incoming data and statements by several Federal Reserve officials evidently were read by investors as suggesting less weakness in the economy going forward. Thus, the 50-basis-point reduction in th e federal funds ra te on Apr il 18 caught inv estors by surprise . Shortterm interest rates declined in response, as market participants marked down the expected path of the federal funds rate over the next year or so. M ore recently, surprisingly w eak employ ment data a dded to the a mount o f near-term easin g built into asset prices. Futures rates currently indicate that market participants expect the federal funds rate to be cut another 50 basis points at the May meeting to 4 percent and to decline to about 3¾ percent by fall–-about ½ percentage point lower than was anticipated before the March meeting (chart 1). On balance over the intermeeting period, short-term interest rates fell ½ to 1 percentage p oint. (2) Despite the sharp decline in short-term interest rates, longer-term yields rose on balance over the intermeeting p eriod. Most of the increase occurred before 1. Over the intermeeting p eriod, federal fu nds have trad ed at rates near the target levels. The Desk redeemed $11.8 billion of Treasury securities, including $7.5 billion of bills and $4.4 billion of coupon securities, to continue bringing SOMA holdings into conformance with the guidelines on per-issue limits. To offset the resulting reserve drain and m eet longerterm reserve needs, the Desk purchased outright $13.6 billion of Treasury coupon securities in the market and $486 million of Treasury bills from foreign customers. The volume of outstanding lo ng-term R Ps was kep t unchange d at $12.0 billion . Chart 1 Financial Market Indicators Expected Federal Funds Rates Estimated from Percent Financial Futures* Selected Treasury Yields Percent 7.00 6.75 6.50 6.25 6.00 5.75 5.50 5.25 5.00 4.75 4.50 4.25 4.00 Daily 4.75 Two-year 4.50 March 19, 2001 4.25 Ten-year 4.00 May 10, 2001 3.75 May Jul Sep 2001 Nov Jan Mar May 2002 Jul Jun Aug Oct 2000 Dec Feb Apr 2001 *Estimates from federal funds and eurodollar futures rates with an allowance for term premia and other adjustments. Selected Equity Indexes Selected Private Long-Term Yields Index(5/31/00) = 100 Percent 140 Daily 14 13 120 Percent 12 Daily 11 High Yield (left scale) 12 Wilshire 5000 100 DJIA 10 Corporate BBB (right scale) 11 9 10 8 80 9 Nasdaq 60 Jun Aug Oct 2000 Dec Feb Apr Ten-year Swap (right scale) 8 Jun 2001 7 Thirty-year Mortgage (weekly, right scale) Aug Oct 2000 6 Dec Feb Apr 2001 Merrill Lynch BBB index is for maturities of seven to ten years. Selected Risk Spreads* Basis Points 800 300 Daily Spread of Low-Tier CP Rate over High-Tier CP Rate* Basis Points 160 Daily 140 700 High Yield (left scale) 120 600 200 100 500 80 400 60 100 BBB (right scale) 300 40 20 200 Jun Aug Oct 2000 Dec Feb Apr 2001 *These spreads are the difference between the yields on the Merrill Lynch 175 and BBB indexes and that on ten-year swap rate. Jun Aug Oct 2000 Dec *30-day nonfinancial, A2/P2 rate less AA rate. Note: Solid vertical line indicates last FOMC meeting; dotted vertical line indicates intermeeting policy easing. Feb Apr 2001 2 the intermeetin g policy mo ve, as investors beca me mo re confident tha t output gro wth will pick up; the growing likelihood of substantial federal tax cuts also m ay have added pressure on long-term yields. Although yields on longer-term nom inal Treasury securities increased nearly ½ percentage point, those on com parable inflation-indexed securities drifted lower.2 The implied run-up in inflation compensation left that measure ab ove the levels ob served before its sh arp decline in late 2000 associated with emerging w eakness in the eco nomy. Th e improved sentiment ab out the econ omic outlook and the surprise intermeeting policy easing may have contributed to a narrowing of risk premiums, especially on lower-grade corporate debt securities, and to a rise in stock prices. Equity markets were also bolstered by first-quarter earnings reports, which generally came in above sharply reduced expectations, although analysts continued to lower forecasts for earnings in subsequent quarters. Over the intermeeting period, the W ilshire 5000 index gained mo re than 7½ percent, leaving it about 5 perc ent below its year-end level. (3) Equity prices and long-term yields rose in other industrial countries as well, likely reflecting in part the importance of the United States for the global economy and the perceived improvement in prospects for globally important industries, including those in the high-technology area. The increase in equ ity prices was particularly large in Japan–about 15 p ercent–reflecting in part a favorable market reaction to the Bank of Japan’s announcement of policy changes the day before the March FOMC m eeting, which included a return to a zero interest rate target, and the formation of the new Koizumi-led government in late April. Short-term yields abroad 2. Some of the increase in the ten- and thirty-year nominal constant maturity Treasury yields reflected a decline in the on-the-run premium that is typical of the Treasury auction schedule. At the ten-year maturity, the narrowing of this premium is estimated to have added about 10 basis points to the increase in the constant maturity yield over the intermeeting p eriod. 3 generally declined, although by less than in the United States. The European Central Bank ended its “wait and see” p olicy recently with a 25-basis-point cut in its policy rates. The reduction came amid increasing indications of economic weakness in the euro area and despite some signs o f increased inflationary pressure. Policy rates also were cut by 25 basis points in Canada and Switzerland and by 50 basis points in two steps in the United Kingdo m since the March F OMC meeting. The dollar appreciated against a basket of major currencies early in the intermeeting period , but it later retraced that m ovement, pa rticularly after the FO MC’s sur prise interest rate cut in mid-April, and finished the intermeeting period about unchanged (chart 2). over the intermeeting period (4) U.S. authorities did not intervene. The dollar was also essentially unchanged on balance against a basket of currencies of our other important trading partners. Argentine financial markets were roiled by growing uncertainties about the country’s financial situation and speculation that its exchange rate peg might be m odified, as well as by an open dispute between the Argentine governm ent and central ban k over the use of reserve requirements. Market pressures spilled over to Brazil, where the real fell almost 5 percent against the dollar. Risk spreads on dollar-denominated Argentine and Brazilian debt moved up sharply. In contrast, the Mexican peso appreciated abo ut 4 percent against the dollar, as monetary authorities held to their tight policy stance, and spreads on Mexican debt narrowed. The Turk ish lira regained some of its previously lost ground, and T urkish financial markets calmed, as the country’s financial problems appeared to have been brought under better control partly in response to the prospect of additional funding from the IM F and W orld Bank. T he Indone sian rupiah an d the Philipp ine peso both declined sharp ly against the do llar in reaction to fin ancial problem s and dom estic political turmo il. 4 (5) The debt of nonfederal sectors in the United States is estimated to have advanced at a round an 8 percent rate o n average ove r March a nd April, ab out equal to its robust pace of the second half of 2000 and early 2001 (see chart 2). Ho wever, growth of b usiness debt fell ba ck in recent m onths, likely reflecting a reduction in inventory and capital investment and in merger and acquisition activity. Firms continued to borrow h eavily in the corp orate bond market, but th ey reduced th eir reliance on sho rt-term financin g markets. C omme rcial paper ou tstanding ran off further in March and April, albeit at a much slower pace than earlier in the year, and business loans at commercial banks also declined very recently, possibly damped by the further tightening of credit conditions indicated in the most recent Senior Loan Officer Opinion survey. Household borrowing also has showed some signs of slowing in recent months. G rowth in consum er credit declined moderately in Ma rch and is estimated to have slowed further in April, as outlays on durable goods appear to have fallen back from the surprisingly strong pace early in the year. Mortgage debt growth, by co ntrast, seems to h ave largely sustaine d its rapid pace, reflectin g strength in the residential housing sector and substantial refinancing activity. State and local government borro wing picked up further in M arch and April, as lower interest rates fueled advan ce refunding o f existing debt. Th e federal govern ment, in con trast, paid down a considerable amount of debt in April, which pulled down the growth of total domestic nonfinancial debt that month. (6) Spurred by the drop in its opportunity cost, M2 expanded at an average pace of 12½ percent over M arch and A pril, with particula r strength in liqu id deposits and retail money funds. M2 growth was boosted by several special factors, including extensive mortgage refinancing activity and, in April, households' accumulation of liquid balances to make nonwithheld tax payments, which increased by more than allowed for b y seasonal factors. In a ddition, portfo lio flows into safe, liqu id assets Chart 2 Exchange Rates and Financial Flows Nominal Trade-Weighted Dollar Exchange Rates Index(5/31/00) = 100 110 FOMC Daily 108 Major Currencies Index 106 Broad Index Other Important Trading Partners 104 102 100 98 Jun Jul Aug Sep 2000 Oct Nov Dec Jan Feb Mar 2001 Apr May Solid vertical line indicates last FOMC meeting; dotted vertical line indicates intermeeting policy easing. Growth of Nonfederal Debt Growth of Business Debt Percent 16 Annualized p p 2000 J 2001 F M 16 Annualized 14 14 12 12 10 10 8 8 p 6 1999 p - Preliminary. Percent Sum of Selected Components* p 6 4 4 2 2 0 0 1999 2000 2001 J F M p - Preliminary. *Bonds, commercial paper, and C&I loans. A A M2 Opportunity Cost* M2 Growth Percent Percentage Points 16 Annualized 3.5 Monthly 14 3.0 12 2.5 p 10 2.0 8 1.5 6 1.0 4 April 2 0.5 0 1999 p - Preliminary. 2000 J 2001 F M 0.0 1999 2000 A * Yield on three-month Treasury bill minus average return on M2 assets. MARA:DS 5 amid volatile movements in equity prices likely added to M2 grow th in re cent m onths . However, weekly data suggest that M2 growth has slowed some of late, perhaps reflecting an unwinding of tax-related balances and the resumption of more normal portfo lio flow s into equities. M3 a lso exp anded at a rap id pace in recent months . Growth of institution-only money funds remained very brisk, in part because rates on those funds do not decline as quickly as short-term market rates. Managed liabilities included in M3 also increased in April, apparently to help finance a pickup in bank credit growth and a shift in bank fund ing from foreign to U.S. sources. 6 MONEY AND CREDIT AGGREGATES (Seasonally adjusted annual percentage rates of growth) 2000 Jan 2001 Feb 2001 Mar 2001 Apr 2001 (p) M2 6.2 12.4 10.8 14.5 10.2 M3 9.2 16.0 9.8 10.4 17.4 Domestic nonfinancial debt Federal Nonfederal 5.4 -6.7 8.6 4.0 -7.1 6.6 6.4 -3.0 8.5 7.2 1.2 8.6 4.2 -11.5 7.7 Bank credit Adjusted1 10.0 9.4 11.5 12.0 3.1 3.1 1.9 0.4 5.2 5.1 1.4 2.0 11.2 10.8 3.3 3.3 2.4 2.9 7.0 7.5 Money and Credit Aggregates Memo: Monetary base2 Adjusted for sweeps 1. Adjusted to remove the effects of mark-to-market accounting rules (FIN 39 and FASB 115). 2. Adjusted for discontinuities associated with changes in reserve requirements. p -- preliminary 7 Policy Alternatives (7) The staff forecast for this meeting embodies a weaker outlook for aggregate demand than in the March Greenbook, reflecting in part incoming information suggesting lower-than-expected trajectories for investment and consump tion spendin g. With pro jected spendin g on capital eq uipment so fter than in the last forecast and estimates of multifactor productivity growth over recen t years revised down, the staff has trimmed its estimate of the growth of structural productivity somewhat, which further damps prospective aggregate demand. The staff has assumed that the Federal Reserve will respond to this more negative outlook by easing policy 50 basis points a t this meeting. T hereafter, the federal fu nds rate is held u nchan ged at a level o ne percentag e poin t below that of the last Gree nboo k. Earnings disappointm ents are expected to trigger some near-term declines in stock prices, but long-term interest rates and the dollar are expected to hold near current levels given this policy path. The impetus provided by the cumulative policy easings and the support to investment and real income from continuing efficiency gains engendered by new technologies contribute to a strengthening of the growth of spending over the forecast period. In addition, fiscal stimulus spurs consumption demand beginning late r this year. By the end of the projec tion period, eco nomic growth rises back to a rate close to that of its potential. With slack emerging in labor and product mark ets and energy prices declining, core PCE inflation slips back u nder 2 percent in 2 002. (8) In considerin g the approp riate stance of policy , it may be useful to compare the real federal funds rate with estimates of the current level of the equilibrium real federal funds rate. The equilib rium rate is defin ed here to be th e rate that, if maintained, eventually would return output to potential once the effects of any transitory disturb ances have dissip ated. Thus, the eq uilibrium rea l federal funds rate 8 reflects the longer-term forces shaping the outlook for the real econom y and so provides one benchmark for judging the implications of alternative policy stances. To be sure, the appropriate stance of policy relative to that equilibrium rate in a given instance will depend on policymakers’ objectives, the current levels of output and inflation, and an assessment of the transitory factors that may influence the paths of inflation and output over the next few years. (9) The chart on the next page shows a range of estimates of the equilibrium real federal funds rate, as well as the actual real funds rate and its historical average.3 The range is constructed from several individual e stimates of th e equilibrium real rate. Two are derived from the FRB/US model; two others are calculated from the relationship be tween the real fu nds rate and th e output gap using a statistical filter to separate perm anent chang es in that relationsh ip from tem porary deviatio ns. In both of these appro aches, one estim ate is based on h istorical data wh ile the other aug ments these data with the staff forecast throu gh 2002. A fifth estimate, which begins in 1998, is inferred from actual indexed debt yields. As can be seen in the chart, the estimates imply some decline in the equilibrium rate over recent quarters, likely owing in part to the longer-term effects on demand of an increase in the equity premium, which reduces wealth, and of a slowing in the growth of potential output, which holds down the expansion of permanent real income and earnings. The FOMC’s current target for the nominal funds rate implies a real federal funds rate of about 2¾ percent–around the low er end of the range. The chart also shows the real fun ds rates implied by the three policy alternatives discussed below.4 3. All measures of the real federal funds rate are calculated using the core PCE inflation rate over the previous four quarters as a proxy for expected inflation. 4. Note that since expected inflation is assumed to equal past actual inflation, a given change in the nomina l federal funds ra te target translates into an e qual imm ediate change in the real federal funds rate. Chart 3 Actual Real Federal Funds Rate and Range of Estimated Equilibrium Real Rates Percent 5 Quarterly Actual Real Funds Rate 4 Historical Average: 2.81 (1966Q1-2001Q1) 3 2 ● Current Rate ● 25 b.p. Easing ● 50 b.p. Easing ● 75 b.p. Easing 1 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 Note: The shaded range represents the maximum and the minimum values each quarter of the five estimates of the equilibrium real federal funds rate described in the text. Real federal funds rates are calculated using four-quarter lagged core PCE inflation. The values of the real federal funds rate in the second quarter of 2001 and under the three policy alternatives include the staff projection of core PCE inflation for that quarter. 9 (10) If the Committee, like the staff, anticipates a prolonged period of weak aggregate demand, it might cho ose the 50 basis point reduction in the target federal funds rate assumed in the staff forecast. While such a reduction would leave the real funds rate noticeably below the range of the estimates of its equilibrium value, an accommod ative policy stance may be seen as needed for a time to co unter temporary restraints on aggregate demand. In particular the Committee may be concerned about household spending in an environment of a weaken ing job market and abo ut business investment outlays in view of the drags from the previous slowdown in final demand and the over -accumulatio n of capital in som e sectors. In these circu mstances, grow th would remain slugg ish for a time even after further policy easing, lessening pressures on resources and likely rolling back the recent upticks in inflation and inflation expectations. Indeed, the Committee may view the resource gap likely to open up under this scenario as sizable enough to imply a margin in which spending could snap back faster than expected without producing a deterioration in the inflation environm ent. Market p articipants already expect a substan tial reversal of policy in 2002, suggesting that they would be prompter than usual in bringing forward in time and increasing the size of the anticipated tightening if evidence of such a snap-ba ck emerged. As long as the Committee reinforced such sentiment with its words and actions, the resulting increase in real interest rates would work to stabilize the econo my an d constrain inflatio n. (11) Investors are exp ecting a 50 basis p oint move at this meeting, alo ng with a statement ind icating that the b alance of risks rem ains weighted toward eco nomic weakness, to be followed by an additional 25 basis point move by fall. Validating market expectations for this meeting would leave interest rates, equity prices, and the foreign exchan ge value of the d ollar largely unch anged. The C ommittee may find this outcome especially attractive if it believes that the balance of risks is sufficiently tilted 10 toward w eakness to m ake the added policy easing bu ilt into asset prices a reaso nable possibility. (12) The Com mittee migh t choose a m ore mod est 25 basis point reduction in the federal funds rate at this meeting if it views aggregate demand going forward as likely to be noticeably less weak than in the staff forecast, perhaps because it sees the large cumulative easing of policy since the start of the year as providing m ore support for demand than in that forecast. Among financial indicators, the rapid growth of money an d the steepness o f the yield curve m ay suggest that co nsiderable stim ulus is already in place. In these circumstances, with the real funds rate at the low end of the range of estimates of its equilibrium level, and with equity m arkets having risen appreciably over the intermeeting period, the C ommittee may believe that a m ore forceful policy action at this meeting would create unaccep table odds of a policy overshoot, w ith potentially ad verse consequ ences for inflation. C oncerns in this regard might be accentuated by the recent firmer tone of the inflation data and the increases in survey and market measures of expected inflation. Thus, even if the Comm ittee suspects that ad ditional easing m ight well be ap propriate at som e point, it might cho ose a smaller p olicy step at this m eeting to allow time for mo re evidence to accumulate on wh ether the economy will be soft enou gh to contain inflation pressures and w arrant additional easing . (13) Market participants would b e surprised by a 25 basis point easing. Even if such a policy move is accompanied by a statement that the balance of risks remains weighted toward econ omic weakness, short-term interest rates would rise as investors marked up their expectations for the path of the federal funds rate over coming months. Higher interest rates, together with a sense that mo netary policy is less focused on fostering a return to robust econ omic growth, wou ld lead to a fall in stock prices. If the drop in equity prices is quite substantial, longer-term interest rates also 11 might declin e, reflecting the weak er outlook fo r the econom y. These effects in financial markets would be attenuated if, in light of the statement accompanying the policy announcement, the Federal Reserve is seen more as stretching out the timing of its policy moves than as reducing the total amount of easing that will be forthcoming. (14) If the Com mittee believes th at the outlook for aggregate d emand is probably weaker than in the staff forecast, or that the risks around that forecast are skewed substantially to the downside, it might choose a 75 basis point reduction in the target federal funds rate. Such weakness could ow e, for example, to a more protracted falloff in high-tech investment as businesses reconsider the profitability of these capital projects, which in turn would damp structural productivity growth and be reflected in a m ore prono unced declin e in the equilibriu m real fund s rate. Even if the Committee agrees with the staff forecast of output and employment, it still may view their projected paths as unacceptably weak, justifying a larger cut in the federal funds rate than is assumed in that forecast. For example, the Committee may think that the unem ployment r ate does not n eed to rise as m uch or as qu ickly as in the staff forecast to keep inflation in check. (15) A 75 basis p oint easing acco mpanied by a statemen t that the risks rem ain weighted toward economic weakness would lower the expected near-term path of policy, reducing other shorter-term interest rates and easing financial conditions m ore generally. The larger-than-expected policy move w ould presumably bo lster expectations of eco nomic grow th and corpo rate earnings, boosting sto ck pric es. Effects on long er-term nom inal interest rates are less cle ar. Such rates w ould tend to be pulled down by th e change in near-term policy expectations and th e associated decline in real inter est rates, but that tend ency could b e more than offset by a rise in inflation premiums if market participants read the larger-than-expected policy move as increasing th e odds of a sig nifican t picku p in inflation . 12 (16) Although m arket participants expect the Comm ittee to retain its view that the balance of risks is weighted toward economic weakness, the Committee might believe that the level of rates selected at this meeting is sufficiently low to balance the risks of economic weakness with those of increased inflation pressures. If, for example, rates are cut by 50 or 75 basis points, the Committee might view the resulting real federal funds rate of 2¼ or 2 percent as low en ough to make the reduced risks of economic wea kness comparable to the increased risks of higher inflation. Most investors would probably read a shift by the Committee to a statement of balanced risks as indicating that the current cycle of policy easing had ended. As a r esult, a combin ation of a 50 ba sis point policy m ove and a sh ift to balanced risks would cause interest rates to back up and stock prices to decline, as investors take out the additional easing that had been expected in the near term. By contrast, a 75 basis point reduction in the target federal funds rate accomp anied by a statement of b alanced risks w ould tend to lower interest rate s a little, since it would move up the timing of policy easing that is already expected, and boost stock prices slightly. However, market participants might view a move to balanced risks as suggesting that the Committee could be less likely to react quickly to future signs of econom ic weakness, in w hich case stock p rices might slip, cau sing long-term rates to fall a bit further. (17) Under the staff forecast, a significant furth er tightening o f credit conditions is not anticipated in coming quarters, although with the economy soft and profits not rebounding, lenders are likely to remain cautious. The expansion of domestic nonfinancial sector debt is projected to slow to about a 5 percent pace from April to December. Expected federal surpluses result in further substantial paydowns of Treasury debt in coming months before the need to finance the projected tax rebate requires the Treasury to temporarily become a net borrower. Nonfederal debt 13 growth is projected to moderate some, but it remains considerably faster than the expansion in nominal sp ending. Alth ough m ortgage grow th is expected to r emain brisk, household debt growth should slow as weaker consumption spending damps the expansion of consumer credit. Business borrowing also is anticipated to soften, as a widening of the gap betw een internally gen erated funds an d capital expen ditures in the second half of the year is more than offset by a reduction in eq uity retirements. (18) Under the Greenbook forecast, M2 is projected to expand at a 5½ percen t pace from A pril to December , well below its average rate in recent months . The deceleration owes in part to the projected slowdown in the growth of nominal spending and the waning effects of policy easings on opportunity costs. In addition, some of the special factors that have boosted M2 growth of late–including mortgage refinancing an d tax-season effects, an d perhaps so me safe haven flows out of eq uity markets–are expected to u nwind ov er coming m onths. M3 growth is pr ojected to decline to a 7 percent pace over the April-to-December period, reflecting the moderation in M2 expansion and smaller increases in institutional money funds as their rates ad just to lower market inter est rates. 14 Directive and Balance-of-Risks Language (19) Presented below for the mem bers' consideration is draft wording for (1) the directive and (2) the “balance-of-risks” sentence to be included in the press release issued after the meeting (no t part of the directiv e). (1) Directive Wording The Federal Open Market Comm ittee seeks monetary and financial conditions th at will foster price stab ility and prom ote sustainable g rowth in output. To fu rther its long-run objectives, the Co mmittee in th e immed iate future seeks conditions in reserve markets consistent with MAINTAINING/ INCREASING /reducing the federal funds rate AT/to an average of around ___4½ percent. (2) “Balance-of-Risks” Sentence Against the background of its long-run goals of price stability and sustainable economic growth and of the information currently available, the Committee believes that the risks [ARE BALANCED WITH RESPECT TO PROSPECTS FOR BO TH GOALS] [ARE WEIGHTE D MAINLY TOWARD CONDITIONS THAT MAY GENERATE HEIGHTENED INFL ATIO N PR ESSU RES ] [are CON TINU E TO BE weig hted main ly toward con ditions that m ay generate eco nomic w eakness] in the forese eable future. M2 --------------------------Ease Ease Ease 75 bp 50 bp 25 bp --------------------------- M3 --------------------------Ease Ease Ease 75 bp 50 bp 25 bp --------------------------- M2 M3 Debt --------------------------Greenbook Forecast* --------------------------- Monthly Growth Rates Jan-2001 Feb-2001 Mar-2001 Apr-2001 May-2001 Jun-2001 Jul-2001 Aug-2001 Sep-2001 Oct-2001 Nov-2001 Dec-2001 12.4 10.8 14.5 10.2 2.9 6.6 6.3 6.6 6.6 6.2 6.4 5.9 12.4 10.8 14.5 10.2 2.7 6.0 5.5 5.8 6.0 5.8 6.0 5.5 12.4 10.8 14.5 10.2 2.5 5.4 4.7 5.1 5.4 5.3 5.6 5.2 16.0 9.8 10.4 17.4 6.9 7.5 7.3 7.4 7.3 7.1 7.2 6.8 16.0 9.8 10.4 17.4 6.8 7.2 6.9 7.0 7.1 6.9 7.0 6.6 16.0 9.8 10.4 17.4 6.7 6.9 6.5 6.7 6.8 6.7 6.8 6.4 12.4 10.8 14.5 10.2 2.7 6.0 5.5 5.8 6.0 5.8 6.0 5.5 16.0 9.8 10.4 17.4 6.8 7.2 6.9 7.0 7.1 6.9 7.0 6.6 4.0 6.4 7.2 4.2 3.8 5.7 4.7 6.1 6.5 4.0 3.8 4.4 Quarterly Averages 2000 Q4 2001 Q1 2001 Q2 2001 Q3 2001 Q4 6.4 10.8 9.3 6.1 6.4 6.4 10.8 9.2 5.4 5.9 6.4 10.8 9.0 4.8 5.4 7.1 12.4 11.7 7.4 7.2 7.1 12.4 11.6 7.0 7.0 7.1 12.4 11.5 6.7 6.8 6.4 10.8 9.2 5.4 5.9 7.1 12.4 11.6 7.1 7.0 4.6 5.5 5.2 5.3 4.8 Growth Rate From To Dec-2000 Dec-2001 Dec-2000 Apr-2001 Apr-2001 Dec-2001 8.2 12.2 6.0 7.9 12.2 5.5 7.5 12.2 5.0 9.7 13.6 7.3 9.5 13.6 7.1 9.3 13.6 6.8 7.9 12.2 5.5 9.5 13.6 7.1 5.2 5.5 4.9 2000 Q4 Apr-2001 2000 Q4 May-2001 2000 Q4 Dec-2001 11.4 10.0 8.3 11.4 9.9 7.9 11.4 9.9 7.6 13.2 12.2 9.8 13.2 12.2 9.7 13.2 12.2 9.5 11.4 9.9 7.9 13.2 12.2 9.7 5.6 5.3 5.3 6.2 8.4 6.2 8.1 6.2 7.7 9.2 10.0 9.2 9.9 9.2 9.7 6.2 8.1 9.2 9.9 5.4 5.3 1999 Q4 2000 Q4 2000 Q4 2001 Q4 * This forecast is consistent with nominal GDP and interest rates in the Greenbook forecast. 

Federal Reserve (2001, May 14). Bluebook. Bluebooks, Federal Reserve. https://whenthefedspeaks.com/doc/bluebook_20010515

@misc{wtfs_bluebook_20010515,
  author = {Federal Reserve},
  title = {Bluebook},
  year = {2001},
  month = {May},
  howpublished = {Bluebooks, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/bluebook_20010515},
  note = {Retrieved via When the Fed Speaks corpus}
}