bluebooks · February 18, 1975

Bluebook

Prefatory Note

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Content last modified 6/05/2009.

February 14, 1975

STRICTLY CONFIDENTIAL (FR) Class I FOMC

MONETARY AGGREGATES AND MONEY MARKET CONDITIONS Prepared for the Federal Open Market Committee

By the Staff BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM

STRICTLY CONFIDENTIAL (FR) Class I - FOMC

February 14, 1975

MONETARY AGGREGATES AND MONEY MARKET CONDITIONS Recent developments (1)

M1 contracted at an annual rate of about 9½ per cent in

January, and, with recent data suggesting only modest growth in February, a net contraction in M 1 during the two-month target period now seems likely, as the table shows.

Flows into time deposits other than money

market CD's have been generally well sustained, but, with M 1 weak, Growth of Monetary Aggregates and RPD's in January-February Period 1

Reserve and Monetary Aggregates (Growth at SAAR in per cent)

Range of Tolerance

Latest Estimates

-2.3

RPD MEMO: Federal Funds rate (per cent per annum)

7 --10

4.7

6k--9t

4.6

64--7 2/

Ave, for statement week ending 7.17 Jan. 22 6.99 29 6.46 Feb. 5 6.28 12

These figures do not incorporate the regular quarterly benchmark revision of monetary aggregates that will be published this coming Thursday. Revisions in the series (based in large part on the October call report) were relatively minor; the December level for M was raised by about $500 million and the rate of growth for M1 in 1974 was raised from 4.6 to 4.7 per cent. All tables on subsequent pages of this report (with the exception of Tables 1 and 2 following the charts) are based on the new series. The new and old series are compared in appendix table V .

The range shown reflects the reduction in the lower limit from 6½ per cent on February 6.

-2M 2 appears to be growing at only about a 4½ per cent annual rate in the January-February target period--also well below the lower end of the Committee's range of tolerance.

In the face of continued weak loan

demands, banks have reduced their reliance on non-deposit sources of funds since year-end and have not pressed aggressively to issue large CD's.

As a result, the bank credit proxy is expected to show very little

growth during the January-February period. (2)

Immediately after the January FOMC meeting, the Account

Manager began providing reserves with a view to achieving an average Federal funds rate around 7 per cent.

When incoming data showed the

monetary aggregates expanding at annual rates below the lower ends of the Committee's ranges of tolerance, however, the Desk moved to ease money market conditions.

As a result, by the statement week ending February 5,

the prevailing funds rate had declined to about 6½ per cent, the lower limit of the range of tolerance agreed upon at the January meeting.

February 5, the Committee concurred in the Chairman's recommendation to reduce the lower limit of the funds rate constraint to 6¼ per cent, and in the statement week just ended the average rate was 6.28 per cent, As the funds rate dropped, member banks reduced borrowings from the discount window further to near minimal levels; in the first two weeks of February such borrowing averaged about $95 million--more than half of which was special, longer-run borrowing--as compared with an average of around $400 million in January.

-3(3)

The further decline in the Federal funds rate, and the

February 3 reduction in the discount rate to 6¾ per cent, have contributed to sharp reductions in other short-term interest rates as well.

These

declines have ranged generally from 50 to 100 basis points since the last Committee meeting.

Rates on private short-term instruments have registered

the largest changes and are now 200-300 basis points below their year end levels. per cent.

The 3-month Treasury bill has traded most recently around 5.45 Although the rate on prime business loans at leading banks

has also been reduced during the inter-meeting period, the level now prevailing at most key banks is 8¾ or

9 per cent; this is high relative

to the 6-3/8 per cent rate on 90-119 day commercial paper. (4)

The large inter-meeting declines in short-term rates As

have contributed to a strong rally in long-term securities markets. a result, yields on corporate and municipal bonds are now 40-60 basis points below their mid-January levels.

In the market for longer-term

Treasury issues, yields have also moved lower, notwithstanding the Treasury's enlargement of its February refinancing to raise new money and the very heavy volume of Federal deficit financing forecast for the weeks and months ahead by the new Federal Budget.

The new note and

bond issues offered in the Treasury refinancing were all well received and have most recently traded at premiums as much as 1 point above the average prices at which they were initially auctioned.

(5) Savings flows to non-bank thrift institutions--like those to banks--have displayed significant growth in January.

However, with

mortgage demands remaining weak, these expanded flows have been used for the most part to repay debt and rebuild liquid asset holdings.

The

-4growth in savings flows, along with the continued modest volume of new mortgage demands and the general decline in other interest rates, has resulted in further reductions of some 40 basis points in conventional mortgage rates since the turn of the year. (6)

The table on the following page shows (in percentage

annual rates of change) selected monetary and financing flows over various recent time periods.

Appendix table III compares money supply growth rates

computed on a quarterly-average basis with those computed on a lastmonth-of-quarter basis.

Projected figures on the two bases are shown in

Appendix table IV for the alternatives presented in the next section.

Calendar Year 1974

Total reserves

Past Twelve Months Jan.'75 over Jan.'74

Past Six Months Jan.'75 over July '74

Past Three Months Jan.'75 over Oct.'74

Past Month Jan.'75 over Dec.'74

8.6

6.6

4.2

8.2

10.0

10.6

8.7

21.6

24.7

20.9

8.8

8.5

3.7

1.6

1.4

4.7

4.1

1.1

-.1

-9.3

M 2 (M1 plus time deposits atcommercial banks other than large CD's)

7.4

7.0

5.4

5.1

2.9

M 3 (M2 plus deposits at thrift institutions)

6.7

6.6

5.6

6.4

5.4

Total member bank deposits (bank credit proxy adj.) 10.2

9.4

4.5

5.5

3.6

Loans and investments of commercial banks 2/

8.3

7.5

-.2

8.2

2.2

1.6

2.2

2.6

-.6

Nonborrowed reserves Reserves available to support private nonbank

deposits

Concepts of Money (Revised Series) M1 (currency plus demand

deposits) 1/

Bank Credit

Short-term Market Paper (Monthly average change in billions) Large CD's Nonbank commercial paper

1/ Other than interbank and U.S. Government. 2/ Based on month-end figures.

Includes loans sold to affiliates and branches.

NOTE: All items are based on average of daily figures, except for data on total loans and investments of commercial banks, commercial paper, and thrift institutions--which are derived from either end-of-month or last Wednesday-of-month figures. Growth rates for reserve measures in this and subsequent tables are adjusted to remove the effect of discontinuities from breaks in the series when reserve requirements are changed.

Prospective developments (7)

Alternative policy specifications are summarized below for

Committee consideration (with more detailed data shown in the table on

p. 6a). Alt. A

Alt. B

Alt. C

Alt. D

Range of tolerance for Feb.-March M1

6-8

7k-9k

RPD

1 -3%

Federal funds rate (inter-meeting range)

4-5

k-6-

5-7

4 -6

6 -8-

6-8

5 -7%

k-2%

-%--1

-1-.

4%-5%

5 -6

6-7

Longer-run growth rates 1/ M1 June'74-June'75 Dec.'74-June'75 Dec.'74-Sept.'75

71 6 8

6% 4 6

6 3 5

6 2% 4%

7k 9k 10%

6% 7 8

6k 6% 7%

6 6k 7

M N2 2

June'74-June'75 Dec.'74-June'75 Dec.'74-Sept.'75

1/ Figures shown assume staff GNP projection for first three quarters of 1975, and Federal funds rate behavior as described in the para-

graphs below.

(8) The specifications in the preceding paragraph assume not only that staff GNP projections for the first three quarters of the year are realized but also that a more normal relationship is re-established between the transactions demand for money, narrowly defined, and

-6aAlternative Longer-Run Growth Rates for Key Monetary Aggregates

M1 Alt. A 1975

1975

Jan. Feb. Mar. June Sept. 1st Q. 2nd Q. 3rd Q. Feb. M r.

282.1 283.5 285.4 293.0 301.6

Alt. B Alt. C 282.1 283.4 285.1 290.5

297.0

282.1 283.4 284.9 289.4 295.3

1.5 10.7 11.7

1.1 7.6 9.0

0.8 6.3 8.2

6.0 8.0

5.5 7.2

5.5 6.4

Alt. D 282.1 283,3 284.7 288.3 293.4

5.1 5.9

, I'- ,H

Alt. A Alt. B, Alt. C Alt. D 615.8 615.8 619.2 619.4 623.0 623.5 635.2 637.6 649.9 653.9 Growth Rates 6.7 6.0 5.7 11,5 9.0 7.8 10.2 9.3 13.4

615.8 619.5 624.6 642.6 664.1

7.2 9.9

6.6 7.4

7.0 7.9

Alt. A

1975

Alt. D-

959.4

959.4 965.6

959.4 966.0

959.4 965.8

974.6 1005.7 1040.4

973.5

999.3 1027.3

5.4 6.9 8.3

8.2 12.8 13.8

7.7 10.6 11.2

9,4 10.0

7.2 8.4 9.1

6.4 6.8

8.3 10.7

8.0 9.6

7.9 8.6

7.8 8.2

965.7 972.7 995.5

1020.5 7.4

Alt. B Alt. C

Alt. D

Alt. A

Alt. B

Alt. C

Alt. D

708.7 712.8 718.5 738.1 761.3

708.7 712.7 717.3 732.9 750.7

708.7 712.5 716.8 730.3 746.4

708.7 712.4 716.2 727.9 742.1

495.8 495.5 498.8 510.3 524.1

495.8 495.4 498.3 508.4 521.0

495.8

495.6 499.5 513.5 530.6

1st Q. 2nd Q. 3rd Q.

4.2 11.2 13.3

3.6 9.2 10.8

3.2 8.1 9.9

3.0 7.0 8.8

7.9 10.9 12.8

7.2 8.7 9.7

6.9 7.5 8.8

6.6 6.5 7.8

Feb.

-0.5 9.4

-0.7 8.0

-1.0 7.0

-1.2 6.5

6.9 9.6

6.8 7.7

6.4 7.2

6.3 6.4

Jan. Feb. Mar. June Sept.

495.8

495.3 498.0 506,7 517.8 Growth Rates

1975

Mar.

1/ M 1 is defined as M2 plus CD's.

Alt. C

619.1 622.6 633.3 646.4

615.8

Credit Proxy Alt. A

Alt. B

972.2

992.5 1015.1

-7nominal GNP.

In particular a rebound in money demand is anticipated

for the weeks immediately ahead following the unusually large contraction of recent weeks--an expectation that is supported in some degree by the early February data.

Thus, M 1 growth is expected to be fairly sub-

stantial under any of the alternatives in the February-March period. (9)

Of the alternatives shown, alternative A encompasses the

6 per cent annual growth rate for M 1 specified by the Committee at its last meeting in its longer-run targets for the first half of '75.

This

alternative also shows a 9¾ per cent growth rate for M2, slightly higher than the rate specified by the Committee last time.

The projected

relationship between M 1 and M2 is changed because a further decline in market interest rates is now assumed to be necessary if the indicated M1 growth rate is to be attained by mid-year, and that should result in larger inflows of consumer-type time and savings deposits. (10)

Given the January shortfall in M1

and the sharply weaker

economy now projected by the staff for the first and second quarters of this year, we would expect it to be necessary for the Federal funds rate to decline to around the middle of a 4-5 per cent range between now and mid-March if the growth in the aggregates as shown under alternative A were to be attained.

Some further decline in the funds rate might be

needed by early spring. (11)

So steep a drop in interest rates would have a very

substantial cumulative impact on the demand for money, narrowly and broadly defined.

By the second quarter, the staff would expect M 1 growth,

for example, to be at about a 10 per cent annual rate, and to accelerate further in the third quarter when a sharp recovery in GNP is projected.

-8Thus, over the first nine months of the year, this alternative implies an 8 per cent annual rate of growth in M1.

If the Committee should wish

to get back on the 6 per cent growth trend after mid-year, a sharp rise in interest rates would be necessary during the late spring and summer. (12)

The specifications of alternative B involve attainment

of a 6 per cent rate of growth in M1 by September, rather than by midyear. With the target horizon stretched out, interest rates are likely to decline more moderately over the near-term, and the later upward movement is likely to be more delayed and probably less sharp.

The

annual growth rate for M1 over the first half of this year under this alternative would be around 4½ per cent, while M2 would expand at about a 7½ per cent rate. (13)

Alternative B contemplates a further decline in the

Federal funds rate over the next few weeks to about the middle of a 4¾-5¾ per cent range.

Further significant declines in the funds rate

in the spring may not prove necessary, assuming that GNP is no weaker than projected for the first half of this year and that the sharp expansion in economic activity projected for the third quarter develops. (14)

Private short-term credit demands are expected to remain

weak into early spring, but the Treasury is likely to borrow an additional $15-$18 billion of new cash between now and mid-April.

The provision of

bank reserves and easing of money market conditions needed to sustain growth in the monetary aggregates, as specified in alternative B, should, at least over the near-term, permit the new Treasury debt to be absorbed at declining interest rates, though the reductions may be modest.

The

-93-month bill rate could drop by about ½ percentage point to around 5 per cent between now and the next Committee meeting.

Given the

shift in borrowing demands from private sectors to the Treasury, private short-term rates may decline more.

Longer-term rates may

show rather modest further declines, however, since corporate and state and local government demands on bond markets are expected to remain sizable. (15)

Alternative C contemplates a smaller reduction in the

funds rate than alternative B and hence a less rapid growth in the monetary aggregates between now and the end of summer.

Under this

alternative, M1 is indicated to expand at an annual rate of about 5 per cent over the first nine months of the year.

By the time the

year is over, M1 may have grown at near a 6 per cent rate under this alternative if economic activity in the second half of the year turns out to be as strong as projected in the Green Book. (16)

Under alternative C, the funds rate would be expected

to decline to around 6 per cent--the mid-point of the range shown in paragraph (7)--or a little below, between now and the next Committee meeting.

Such a decline is probably not much more than the market has

already discounted.

As a result, interest rates may decline little

further over the next few weeks under this alternative.

Moreover,

the weight of Treasury financings could place upward pressure on the rate structure rather soon.

-10(17)

Under alternative D, which involves money market

conditions in the neighborhood of those prevailing on average in the period since the last meeting, M 1 would grow at a rate of about 4 per cent over the first nine months of the year.

If the funds rate was

around the 6½ per cent mid-point of the range shown for that alternative, market rates would probably rise--possibly sharply in the Treasury market--in the weeks immediately ahead.

Net inflows of savings to

thrift institutions would not be likely to strengthen from their recent pace, and might slacken somewhat--which would tend to limit the extent of recovery in housing.

In general, prospective market

developments under this alternative may have implications for the projected pattern of economic recovery in the second half of the year.

-11Proposed directive (18)

Presented below are four alternative formulations for

the operational paragraph of the directive, which are intended to correspond to the similarly lettered policy alternatives discussed in the preceding section.

In all four alternatives, it is proposed to

delete the reference to Treasury financing--because the quarterly financing announced on January 22 has been completed--and the Board's action on reserve requirements. Alternative A To implement this policy, while taking account of the forthcoming Treasury financing,] developments in domestic and [DEL: international financial markets, [DEL: and the

Board's

action on

reserve requirments,] the Committee seeks to achieve bank reserve and money market conditions consistent with more rapid growth in monetary aggregates over the months ahead than has occurred in recent months. Alternative B To implement this policy, while taking account of [DEL: the financing,] Treasury forthcoming

developments in domestic and

international financial markets, {DEL: on action Board's the and reserve requirements,] the Committee seeks to achieve bank

reserve and money market conditions consistent with SOMEWHAT more rapid growth in monetary aggregates over the months ahead than has occurred in recent months.

-12Alternative C

To implement this policy, while taking account of [DEL: the financing,] Treasury forthcoming

developments in domestic and

international financial markets, [DEL: on action Board's the and reserve requirements,]the Committee seeks to achieve bank reserve and money market conditions consistent with [DEL: rapid more MODERATE growth in monetary aggregates over the months ahead than hasoccurred

months.] recent in

Alternative D To implement this policy, while taking account of [DEL: the financing,] Treasury forthcoming

developments in domestic and

international financial markets, [DEL: and the Board's on action reserve requirements,] the Committee seeks to achieve bank reserve and money market conditions consistent with[DEL: rapid more MODEST growth in monetary aggregates over the months ahead months.] recent in occurred has than

CHART 1

CONfIDENTIAL (FR) CLASS In-FOMC 2/14/75

RESERVES AVAILABLE TO SUPPORT PRIVATE NONBANK DEPOSITS BILLIONS OF DOLLARS

-134

S 1973

J 1974

Break In Series Due To Changes In Reserve Requirements

M 1975

-1

N 1974

F 1975

CHART 2

CONFIDENTIAL (FR) CLASS II-FOMC

2/14/75

MONETARY AGGREGATES NARROW MONEY SUPPLY Ml

1973

1974

BILLIONS OF DOLLARS

1975

F 1974

1975

CHART 3

2/14/75

MONETARY AGGREGATES ADJUSTED CREDIT PROXY

BILLIONS OF DOLLARS 500

500

480

440 I

RVES

1973 * Break In Series Due To Changes In Reserve Requirements

BILLIONS OF

1974

1975

2/14/75

CHART 4

MONEY MARKET CONDITIONS AND INTEREST RATES MONEY MARKET CONDITIONS

PER CENT 14

INTEREST RATES Short-term

PERCENT

INTEREST RATES Long-term

PER CENT

FUNDS

-7

BILLIONS OF DOLLARS --1 q -5

I IL 1974

1975

1974

1975

1974

1975

TABLE

CONFIDENTIAL (FR) CLASS II - FOMC FEBRUARY 14,

BANK RESERVES (ACTUAL AND CURRENT PROJECTIONS)

--------

------

- -

- -- RESERVES------ --AVAILABLE------------FOR--- --------

- ----

--- II RESERVES AVAILABLE FOR PRIVATE NONBANK DEPOSITS

- ---

SII------------------NONBORROWED I II TOTAL

PERIOD -- - -

RESERVES

ANNUAL RATES OF CHANGE QUARTERLY: ---- ----1974--1ST OTR. TR. 2NO 3RD OTR. 4TH QTR.

34,444

3 5,465

(34,110)

(34,105)

II II II II

ii II IIl II It II II

I I

5.7 19.1 9.1 0.7

I MONTHLY: 1974--NOV. DEC.

36,966 (35,563)

-3.0

!I II II II

6.4

1975--JAN. FEB.

1.4 7.91

JAN.-FEB.

II II II II 11

4.6 )

WEEKLY LEVELS-SMILLIONS

(4)

35,622 36,17

If 1975--JAN. FEB.

--- - -- - --

REQUIRED RESERVES

II----------------------------------

SEAS ADJ I NON SEAS ADJ SEAS ADJ INON SEAS ADJ I1 RESERVES ------ - --------- ------------- - ---------- - -(1) I 12) II (3) 121 II MONTHLY LEVELS-$MILLIONSI II ------------------I 1974--NOV. I 34,868 3 4,675 II 36,874 34,63, II 3 4,648 DEC. 36,906 ------- -

- --

AGGREGATE RESERVES

1975

36,567 (35,466)

1.2 0.8 5.6

SEASONALLY ADJUSTED

PRIVATE DEMAND

(7)

(8)

20,496 20,507

9,200 9,108

4,967 4,761

2,007 2,272

20,184 1(19891)

9,113 I 9,069)

-1.6 16.0

17.6 34.3

2.8 8.5

(

-7.8)

(

4,970 I 4,9273

2,522 ( 1,452)

0.4 2.2 0.1 5.4

20.9 S -16.1 )

GOV'T AND INTERBANK

16)

34.4

10.0 -25.7 )

CO*S AND NON DEP

15)

1.3 20.1 8.2 4.2

OTHER TIME DEP

-14.7 15.9) 0.4)

2.4 )

I! JAN.

34,758

15 22 29

34.347 34,414 34,618 34,359

5 12

34,417 34,121

3 5,410 3 5,083 3 5,672 3 5,903 3 5,325

II II II II II

I 37,279 36,677 37,141 37,273 36,815

36,718 36,365 36,533 36,679 36,672

36,666 35,972

36,569 35,882

II FEB.

3 5,058

3 4,050

II II

20,306 20,129 20,352 20,243 20,048

9,061 9,102 9,080 9,126 9,146

4,814 4,937 4,995 5,006 4,981

2,521 2,330 2,726 2,654 2,456

19,994 20,030

9,124 9,062

4,918 4,924

2,249 1,851

II NOTE: DATA SHOWN IN PARENTHESES ARE CURRENT PROJECTIONS. AT THE FOMC MEETING OF JAN. 21, 1975 THE COMMITTEE AGREED ON A RPO RANGE OF 6.25 TO 9.25 PERCENT FOR THE JANUARY-FEBRUARY PERIOD.

TABLE

CONFIDENTIAL (FR) CLASS II - FOMC

FEBRUARY 14,

MONETARY AGGREGATES (ACTUAL AND CURRENT PROJECTIONS, SEASONALLY ADJUSTED)

S MONEY SUPPLY NARROW I BROAD (Ml) I (M2)

I I

PERIOD

(1)

I I

I ADJUSTED II U.S. CREDIT II GOVT. I PROXY II DEPOSITS I

(2)

(3)

612.6 613.9

491.2 494.3

II 1975--JAN. FEB.

281.6 (282.7)

615.4 (618.71

495.8 (495.0)

7.6 ( 6.5)

8.2 20.4 6.6 4.3

15.1 21.3 9.2 12.6

12.8 8.6 7.3 9.0

26.3 78.2 17.2 25.9

6.8 2.1

9.5 2.5

7.6

7.6 15.9

11.8 2.9

-9.7 67.4

-9.3 ( 4.71

2.9 ( 6.41

3.6 (-1.9)

18.3 1 7.0)

13.4 S7.9)

1-2.3)

( 4.7)

(

(12.7)

(10.71

(19.9)

424.0 425.8 427.0 426.7 427.6

331.0 332.5 334.1 334.1 334.7

93.1 93.3 92.9 92.7 92.8

6.2 8.1 7.4 7.6 7.3

427.9 429.0

334.8 335.8

93.1 93.2

6.8 6.5

494.9 495.6 496.5 495.9 495.1

5 PI 12 PEI

281.4 282.5

616.1 618.3

494.3 494.5

---------

34.6 (5.2)

0.0 0.1 1.9 1.6 0.1

I NOTE:

0.1 0.2

II II II 614.7 614.0 615.7 616.0 615.6

I I

0.8)

283.7 281.5 281.6 282.0 280.9

- -------

92.9 (93.3)

9.3 7.7 4.6 6.8

---------- I

----

333.8 (336.0)

426.8 (429.3)

0.7 ( 0.2)

5.5 6.5 1.6 4.3

WEEKLY LEVELS- -$ILLIONS

--- 7.6 8.4

414.9 420.4

1.9

JAN.-FEB.

FEB.

85.5 90.3

4.6

1975--JAN. FEB.

329.3 330.1

(6)

MONTHLY --1974--NOV. DEC.

(8)

(5)

PERCENT ANNUAL GROWTH -------- ---------QUARTERLY --------1974--1ST QTR. 2NO OTR. 3RD QTR. 4TH QTR.

JAN.

NONDEPOSIT I SOURCES OF I FUNDS

(7)

(4)

II 263.3 283.8

I MONTHLY LEVELS-SBILLIONSI --------------------I 1974--NOV. DEC, I

TIME AND SAVINGS DEPOSITS I OTHER I TOTAL I THAN CD S I CD S

DATA SHOWN IN PARENTHESES ARE CURRENT

---------

- ---- - - ----

PROJECTIONS.

- -- --

- - - ----------

P PE -------

PRELIMINARY PARTIALLY ESTIMATED --- - -- - - - - ---- -

1975

CONFIDENTIAL (FR) CLASS II - FOMC TABLE

FEBRUARY 14, 1975

RESERVE EFFECT OF OPEN MARKET OPERATIONS AND OTHER RESERVE FACTORS (Millions of dollars, not seasonally adjusted)

Open Market Operations 1/ RP's Coupon Agency Bills Net 3/ Issues Isques & Accept. (4) (3) (2) (1)

Total (5)

Daily Average Reserve Effects 2/ Other 4/ A Member Open Market Factors Bank Borrowing Operations (8) (7) (6)

in reserve categories req. res. against available res. 5/ U.S.G. and interb. (6+)(7)+(8)-(q) (10) (9)

/ Target available reserves 5/ 11

Monthly 1974 --

1975 --

898 862 -594

125 -176

726 235 191

-3,760 2,225 549

-2,011 3,322 322

1,601 141 -32

309 39 -60

-901 -464 99

465 -450 -67

544 166 74

375 180 375

Oct. Nov. Dec.

-1,727 1,217 729

212 280

331 360

-243 981 -976

-1,970 2,739 393

-633 327 2,963

-1,494 -507 -583

1,990 201 -2,376

177 -183 66

-314 204 -62

315 395 450

Jan. Feb. Mar.

-1,102

421

-14

1,082

388

-636

-5,269 3,987

-4,715 4,043

532 -243

-411 -425

July Aug. Sept.

965 -670

Weekly 1974 --

1975 --

1/ 2/ 3/ 4/ 5/

371 --

114 54

378 -722

63 -172

406 255

4 11

554 56

18 25

313 399

-280

360 --

1,09] 757

1,764 1,436

432 2,612

170 -156

Jan.

1 8 15 22 29

-85 -309 -371 -156 12

406 -

-14 --

-3,323 -3,069 2,492 4,601 -3,119

-3,409 -3,393 2,526 4,445 -3,107

-103 -1,918 -863 664 314

-101 -249 296 -14 -451

947 1,934p 46 1, 7p 77 -5 p -822p

293 84p 311p -158p 8 -3 1p

-38

-2,271

-689

-66p

-299 -1,091

420p

5 12 19 26

-46

Feb.

-2,608

450 -317P 589p 23 1p -578p -249p

3,612

2,521

-1,899

-7

937p

60p

-1,029p

Dec.

-133 -2,373

auctions. Represents change in System's portfolio from end-of-period to end-of-period; includes redemptions in regular bill Represents change in daily average level for preceding period. Includes matched sale-purchase transactions as well as RP's. Sum of changes in vault cash, currency in circulation, Treasury operations, F.R. float, gold and foreign accounts, and other F.R. accounts. Target change for Jan. and Feb. reflects the target adopted at the Jan. 21, 1975 FOMC meeting. Reserves to support private nonbank deposits. Target change for previous months reflects the bluebook patterns that are consistent with target ranges that were adopted during the month.

CONFIDENTIAL (FR) CLASS II - FOMC

TABLE

FEBRUARY 14, 1975

SECURITY DEALER POSITIONS AND BANK POSITIONS Millions of dollars U.S. Govt. Security Dealer Positions

Period

Bills (1) 1973 -- High

Coupon Issues (2)

Member Bank Reserve Positions

Dealer Positions

Corporate Bonds

Municipal Bonds

Excess** Reserves

Borrowing at FRB** Seasonal Total (b)

Basic Reserve Deficit 38 Others 8 New York to)

3,796 897

1,299 -301

631 -240

2,561 688

-5,243 -1,831

-10,661

3,678 -289

2,203 -309

628 -168

3,906 647

-7,870 -2,447

-12,826

Feb. Mar.

3,102 2,436 1,986

540 1,619 583

162 184 134

1,051 1,162 1,314

-4,753 -5,262 -5,030

-10,893 -10,769 -11,058

Apr. May June

1,435 408 580

99 85 9

182 178 204

1,736 2,590 3,020

-3,952 -3,171 -4,445

-11,603

July Aug. Sept.

457 1,758 2,309

-214 398 552

162 107 180

3,075 3,337 3,282

-3,522 -4,231 -4,235

- 9,555 - 9,224 - 8,250

Oct. Nov. Dec.

2,174 2,900 2,985

654 1,608 1,836

197 205 258

1,813 1,252 727

-4,602 -6,322 -5,960

- 8,689 - 9,715

1975 --

Jan.

*2,501

*2,050

-5,378

- 9,744

1974 --

Dec.

2,975 2,965 3,678 2,942

1,630

-5,400 -7,245 -6,704 -5,243

- 9,889

1 8 15 22 29

2,234 2,487 3,351 *1,586 *2,308

2,507

5 12 19 26

*2,739 *3,555

Low 1974 -- High

Low 1974 -- Jan.

1975 -- Jan.

Feb.

NOTE:

1,678 1,714 1,680

1 5p 283 -159 217 429

39 8

1,070 648 818 662

2,036 *1,619 *1,615

577 8 17 p -13p 243p 185p

561 2 31 p 608p 4 59 p 14 3 p

*2,178 *1,863

380p 102p

97p 90p

2,845

-4,771 -5,218 -5,633

- 4,048

- 6,046

- 9,091 - 9,920

-10,169

-10,614 -10,525 -10,129 - 9,016

-10,332 -10,677

-5,853 -4,713

- 9,616

-5,628p 2 -7, 35p

- 8,663p

- 8,504

- 9,310p

Government security dealer trading positions are on a commitment basis. Trading positions, which exclude Treasury bills financed by repurchase agreements maturing in 16 days or more, are indicators of dealer holdings available for sale over the near-term. Other security dealer positions are debt issues still in syndicate, excluding trading positions. The basic reserve deficit is excess reserves less borrowing at Federal Reserve less net Federal funds purchases. Weekly data are daily averages for statement weeks, except for corporate and municipal issues in syndicate which are Friday figures. * STRICTLY CONFIDENTIAL ** Monthly averages for excess reserves and borrowings are weighted averages of statement week figures.

STRICTLY

CONFIDENTIAL (FR)

TABLE

FEBRUARY 14, 1975 SELECTED INTEREST RATES Per Cent

Lone-Term

Rhort-Trm

Treabury Bills Period

Federal Funds

90-Day

1-vear

(1)

Shr-Tr 90-119 Day Commercial Paper

Aaa Utility New Recently Issue Offered

CD's New Issue-NYC 90-119 Day

60-89 Day

U.S. Government (10-yr. Constant Maturity) (10)

FNMA

Auction Yields

(11)

(6)

(7)

(8)

10.50 5.38

10.75 5.50

8.52 7.29

8.30 7.26

5.59 4.99

7.54 6.42

9.37 7.69

10.61 8.05

10.52 8.14

7.15 5.16

8.14 6.93

10.59

8.21 8.12 8.46

8.21 8.23 8.44

5.22

8.71

5.41

6.99 6.96 7.21

8.95 9.13 9.40

5.73 6.02 6.13

7.51 7.58 7.54

9.07 9.41 9.54

(5)

(4)

Municipal Bond Buyer (9)

1973--High Low

10.84 5.61

10.50

1974--High Low

13.55 8.45

12.25

12.25 8.00

12.00

7.88

1974-Jan.

9.65 8.97 9.35

8.86 8.00 8.64

9.05 8.09 8.69

8.83

Feb. Mar. Apr. May June

10.51 11.31 11.93

9.92 10.82 11.18

9.81

9.78

10.83 11.06

10.90 10.88

8.99 9.2'. 9.38

July Aug. Sept.

12.92 12.61 11.34

11.93 11.79 11.36

11.83 11.69 11.19

11.83 11.91 11.38

10.20 10.07 10.38

10.04 10.19 10.30

6.68 6.69 6.76

7.81 8.04 8.04

9.84 10.25

Oct. Nov. Dec.

10.06 9.45 8.53

7.46 7.47 7.15

9.55 8.95

9.33 8.72 8.84

10.16 9.21 9.53

10.23 9.34 9.56

6.57 6.61 7.05

7.90 7.68 7.40

10.22

9.18

9.35 8.78 9.00

1975--Jan.

7.13

6.26

7.39

7.43

7.45

9.36p

9.45p

6.82

7.39

9.25

4 11 18 25

9.02 8.86 8.72 8.45

7.45 7.28

9.22 9.00 9.13 9.25

9.25 8.88 8.88 9.00

9.13 8.75 8.75 8.75

9.50 9.59 9.51

9.39 9.57 9.59

6.89 7.15 7.08

9.64

7.08

7.61 7.37 7.24 7.37

9.61

6.99

7.20 6.95 6.63 6.61

1 8 15 22 29

7.35 7.70 7.22 7.17 6.99

7.02 6.68 6.63 6.32 5.62

6.69 6.56 6.44 6.33 5.91

9.34 8.43 7.73 7.18 6.55

9.00 7.88 7.25 6.75 6.25

9.00 7.75 7.38 6.63 6.50

9.67

7.08 6.99 6.90 6.59 6.54

7.37 7.32 7.38 7.44 7.41

9.47

6.34 6.27

7.31

1974--Dec.

1975--Jan.

5.63

7.08

1974--Feb.

5 12 19 26

6.46 6.28

5.62 5.72

5.65 5.58

6.60 6.38

Daily-Feb.

6 13

6.21 6.31p

5.60 5.62

5.45 5.60

6.38 6.38

NOTE:

7.88

7.97 8.56

9.62 9.38 9.45 9.00 8.89 9.02p

6.25 6.25

6.00 6.00

9.45 9.55 9.47 9.21 9.12 9.16p

5.20

8.43

8.48 8.53

10.58 9.87 9.53

9.52

9.37 9.12

8.98

7.32p

7.28 n.a. _

-I

~-I

~L---

~1-

-I

Weekly data for colums 1 to 4 are statement week averages o daily data. Columns 5 and 6 are one-day Wednesday quotes. For columns 7, 8, and 10 the weekly date is the mid-point of the calendar week over which data are averaged. Column 9 is a one-day quote for Thursday following the end of the statement week. Column 11 gives FNMA auction data for the Monday preceeding the end of the statement week. The FNMA auction yield is the average yield in bi-weekly auction for short-term forward commitments for Government underwritten mortgages.

February

Appendix Table 1

14,

1975

RESERVES AND MONETARY VARIABLES MONEY STOCK

RESERVES

Period Total

BANK CREDIT

MEASURES

Available to NonSupport borrowed Private Deposits

Adjusted Credit Proxy

5 6 7 (Per cent annual rates of growth)

Total Loans and Investments

Total Time

Te Tme Other Than CD's

Tr Thrift Insttution Deposits

CD's

Nondeposit Funds

U.S. Gov't. Demand

Funs

10.6 7.8 7.1

7.7 7.2 9.1

10.0 9.3 7.2

8.7 6.1 4.7

11.1 8.8 7.4

13.1 8.7 6.7

11.3 10.4 10.2

14.6 13.5 8.3

15.7 16.2 15.3

13.5 11.4 9.7

16.7 8.5 5.6

10.4 19.9 26.5

-0.6 2.3 1.8

-0.2 -1.7 -2.0

Semi-annually: Ist Half 1973 2nd Half 1973

6.4 8.9

1.4 13.1

9.8 7.8

7.4 4.7

9.1 8.3

9.5 7.5

13.5 6.8

16.6 9.6

19.8 11.4

10.6 11.6

10.4 6.3

16.7 3.2

0.7 1.6

0.8 -2.5

1st Half 1974 2nd Half 1974

10.6 6.2

1.0 20.3

12.4 4.9

6.3 3.1

8.7 5.8

7.7 5.5

14.5 5.4

15.0 1.4

18.6 11.0

10.9 8.1

5.9 5.1

17.5 9.0

1.8 --

1.4 -3.4

Quarterly: 1st Qtr. 1974 2nd Qtr. 1974 3rd Qtr. 1974 4th Qtr. 1974

1.3 20.1 8.2 4.2

1.2 0.8 5.6 34.4

5.7 19.1 9.1 0.7

5.5 7.0 1.6 4.6

9.3 7.9 4.5 7.0

8.8 6.6 4.0 6.9

8.2 20.4 6.6 4.3

17.5 12.0 5.6 -2.8

15.1 21.3 9.1 12.6

12.8 8.8 7.1 9.0

7.9 3.9 3.1 6.9

4.2 13.3 3.5 5.5

0.9 0.9 0.2 -0.2

-0.7 2.1 1.0 -4.4

32.6 -23.6 -4.7 31.1 21.2 7.1 21.7 -4.3 7.1 -1.8 -1.6 16.0

42.6 -29.2 -9.2 17.2 -7.7 -7.1 13.1 -5.9 9.7 49.6 17.6 34.3

5.9 2.9 8.2 19.1 21.5 15.7 8.6 10.8 7.8 -1.3 -3.0 6.4

-2.7 9.7 9.2 6.1 4.3 10.4 2.1 0.9 1.7 4.7 6.8 2.1

6.9 11.1 9.7 8.0 4.5 11.2 5.2 5.0 3.2 8.5 9.7 2.5

7.2 9.5 9.4 7.3 3.4 8.8 4.9 3.9 3.1 7.2 8. 5 5.0

12.3 2.9 9.2 29.6 16.9 13.6 9.2 6.4 3.9 -5.2 7.6

16.5 17.0 18.4 17.9 12.1 5.7 16.0 9.4 -8.6 -4.5 -12.8

21.4 16.2 7.3 26.6 18.0 18.0 13.3 7.1 6.8 13.5 7.6 16.2

15.6 12.6 9.7 9.3 5.0 11.8 7.9 8.6 4.5 11,9 12.2 2.9

7.8 6.3 9.6 5.8 1.5 4.3 4.7 1.8 2.9 4.3 7.1 9.2

2.6 1.8 -0.2 5.9 4.6 2.8 2.3 0.2 1.0 1.4 -0.7 4.8

-0.1 0.4 0.6 0.6 0.7 -0.4 0.8 -0.2 -0.4 -0.7 -0.3 0.8

1.2 -2.9 1.0 1.4 1.0 -0.3 -1.1 2.0 0.1 -2.6 0.9 -2.7

10.0

20.9

1.4

-9.3

2.9

5.4

3.6

8.2

18.0

13.5

9.9

2.6

-0.8

-1.2

Annually: 1972 1973 1974

OTHER

MEASURES

12 13 14 (Dollar change in billions)

Monthly: 1974--Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. 1975--Jan.

NOTES:

Reserve requirements on Eurodollar borrowings are included beginning October 16, 1969, and requirements on bank-related commercial paper are included beginning October 1, 1970. 1/ Growth rates are based on estimated monthly average levels derived by averaging end of current month and end of previous month reported data. p - Preliminary. FR 712-S

February 14, 1975 Appendix Table 2

RESERVES AND MONETARY VARIABLES SEASONALLY ADJUSTED, BILLIONS OF DOLLARS

Period Total

Available to to Non rowed Support

Pvt

Total

MEASURES

Pvt

Loans Loans

Proxy

Invest

Total Time

Time INonOther Than CD's

Thrift InstN n tuti

U S. CD's

deposit

Gov't

Funds

Demand

D 13

559.0 634.6

313.8 364.5

269.9 300.7

297.5 322.8

43.9 63.8

4.3 6.6

5.6 3.9

453.3 454.4 457.9

643.3 652.4 662.4

371.0 376.0 378.3

304.6 307.8 310.3

324.9 326.6 329.2

66.4 68.2 68.0

6.5 6.9 7.5

5.1 2.2 3.2

920.2 922.8 929.6

469.2 475.8 481.2

672.3 679.1 682.9

386.7 392.5 398.4

312.7 314.0 317.1

330.8 331.2 332.4

73.9 78.5 81.3

8.1 8.8 8.4

4.6 5.6 5.3

599.7 602.2 603.8

933.4 936.4 938.8

484.9 487.5 489.1

692.0 697.3 692.3

402.8 405.2 407.5

319.2 321.5 322.7

333.7 334.2 335.0

83,6 83.8 84.8

9.2 9.0 8.6

4.2 6.2 6.3

215.7 216.5 216,6

608.1 613.0 614.3

944.4 951.1 955.1

488.3 491.2 494.3

692.3 693.4 686.0

412.1 414.7 420.3

325.9 329.2 330.0

336.2 338.2 340.8

86.2 85.5 90.3

7.9 7.6 8.4

3.7 4 6 1. 9

282.1

214.1

615.8

959.4

495.8

690.7

426.6

333.7

343.6

92.9

7.6

0.7

34,919 34,424 34,542 3 4 66 , b

286.4 285.2 283.9 283.2

218.6 217.6 216.1 215.5

615.3 614.8 614.1 613.9

-----

493.5 494.7 495.9 493.1

-----

415 5 418.1 420.4 422.4

328.9 329.6 330.1 330,7

-----

86.7 88.5 90.2 91.7

7.6 8.1 8.9 8.6

3.6 3.4 3.3 0.3

36,718 36,365 36,533 36,679

34,758 34,347 34,414 34,618

284.3 282.0 282.1 282.5

216.5 214.2 214.1 214.2

615.1 614.3 616.1 616.4

----

494.9 495.6 496.5 495.9

-----

423.9 425.7 426.9 426.6

36,672

34,359

281.4

213.1

616.0

495.1

427.4

330.8 332.3 334.0 333.9 334.6

-----

93.1 93.3 92.9 92.7 92.8

8.2 8.1 7.4 7.6 7.3

-0.1 1.9 1.6 0.1

427.8

334.6

93.1

6.8

0.1

31,456 35,164

30,406 33,867

29,092 32,965

255.8 271.5

198.9 209.9

525.7 572.2

823.3 895.0

406.4 448.7

Monthly: 1974--Jan. Feb. Mar.

35,820 35,115 34,978

34,769 33,924 33,664

32,824 32,904 33,130

270.9 273.1 275.2

208.9 210.4 211.9

575.5 580.9 585.5

900.4 907.5 914.6

Apr. May June

35,884 36,519 36,736

34,147 33,929 33,729

33,658 34,260 34,708

276.6 277.6 280.0

212.8 213.3 215.4

589.4 591.6 597.1

July Aug. Sept.

37,399 37,266 37,282

34,098 33,930 34,000

34,958 35,272 35,296

280.5 280.7 281.1

215.7 215.3 215.3

Oct. Nov. Dec.

36,857 36,874 36,906

35,041 35,622 36,173

34,889 34,868 34,634

282.2 283.8 284.3

36,966

36,567

34,444

4 11 18 25

37,179 36,565 36,817 36,863

36,109 35,917 35,999 36,201

1975--Jan. 1 p 15p 22p

37,279 36,677 37,141 37,273

29p

36,815

(

and ments

Annually: 1972 Dec. Dec. 1973

1975--Jan.

Total

Adj Ad Credit

Dep

Deposits 1

OTHER

BANK CREDIT

MONEY STOCK MEASURES

RESERVES

Weekly: Dec.

Feb.

NOTES.

36,666

36,569

34,417

282.0

213.8

616.6

494.3

Estimated monthly average levels derived by averaging end of current month and end of previous month rep rted data. Reserve requirements On Eurodollar borrowings are included beginning October 16, 1969, and requirements on bank-related commercial paper are included beginning October 1, 1970. Adjusted credit proxy includes mainly total member bank deposits subject to reserve requirements, bank-related commercial paper and Eurodollar borrowings of U. S. banks. Weekly data are daily averages for statement weeks. Monthly data are daily FR 712 T averages except for nonbank commercial paper figures which are foi last day of month. Weekly data are not available for M3, total loans and investment and thrift institution deposits. p - Preliminary.

Appendix Table III

Growth Rate in Money Supply (Per cent change at an annual rate)

3.4

6.8

7.3

11.3

7.3

III

0.6

9.1

8.6

10.3

10.6

8.6

10.3

8.9

5.5

5.6

7.7

5.2

7.5

8.7

5.0

10.8

8.9

9.8

7.9

5.5

5.8

9.3

9.6

8.8

9.1

7.0

7.3

7.9

8.3

6.6

7.4

1.6

3.9

4.5

6.2

4.0

5.2

4.6

3.7

7.0

6.5

6.9

6.0

1973

1974

III IV

M = Annual rates of growth calculated from average levels in the final months of the quarters. Q = Annual rate calculated from average levels in all three months of the quarters.

Appendix Table IV Growth Rates in

Money Supply for Alternatives

MI M

M2 Q

M M

8.2

7.0

Alt. A

1975

I II III

1.5

0.4

5.4

6.7

10.7

9.3

11.5

10.5

12.8

11.7

11.6

13.4

12.8

13.8

13.5

Alt. B I

1.0

0.1

6.0

5.1

7.7

6.7

7.7

7.0

9.0

8.5

10.6

10.0

9.0

8.7

10.2

9.9

11.2

11.1

1975

III

Alt.

0.8

0.1

4.9

7.4

6.6

6.3

6.0

7.5

9.4

9.0

8.2

7.8

8.9

10.0

9.9

4.8

7.2

1975

III

Alt. D

1975

0.6

5.1

4.9

6.7

8.4

7.1

6.7

7.9

9.1

III

M = Annual rates of growth calculated from average levels in last months of the quarters. Q = Annual rates calculated from average levels in all three months of the quarters.

Appendix Table V

Comparison of Old and Revised Money Stock Growth Rates (Per Cent Annual Rates of Change)

Old

Revised

Old

Annual: 1974

4.5

4.7

7.3

Half-year: 1974 I II

6.0 2.9

6.3 3.1

Quarterly: 1974 I II III IV

5.5 6.5 1.6 4.3

-2.7 9.7 9.2 6.1 4.3 9.1 2.1 1.3 1.3 3.8 6.8 2.1

Monthly: 1974 Jan Feb Mar April May June July Aug Sept Oct Nov Dec

M3 Revised

Old

Revised

7.4

6.7

8.6 5.8

8.7 5.8

7.6 5.5

7.7 5.5

5.5 7.0 1.6 4.6

9.3 7.7 4.6 6.8

9.3 7.9 4.5 7.0

8.8 6.4 4.0 6.9

8.8 6.6 4.0 6.9

-2.7 9.7 9.2 6.1 4.3 10.4 2.1 0.9 1.7 4.7 6.8 2.1

6.9 11.1 9.7 8.0 4.3 10.5 5.4 5.2 3.2 8.3 9.5 2.5

6.9 11.1 9.7 8.0 4.3 11.2 5.2 5.0 3.2 8.5 9.7 2.5

7.2 9.3 9.5 7.3 3.3 8.5 5.0 4.1 2.9 6.9 8.6 4.9

7.2 9.4 9.4 7.3 3.4 8.8 4.9 3.9 3.1 7.2 8.5 5.0

Cite this document

APA

Federal Reserve (1975, February 18). Bluebook. Bluebooks, Federal Reserve. https://whenthefedspeaks.com/doc/bluebook_19750219

BibTeX

@misc{wtfs_bluebook_19750219,
  author = {Federal Reserve},
  title = {Bluebook},
  year = {1975},
  month = {Feb},
  howpublished = {Bluebooks, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/bluebook_19750219},
  note = {Retrieved via When the Fed Speaks corpus}
}