bluebooks · November 4, 1985

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.

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.

November 1, 1985

Strictly Confidential (FR)

Class I FOMC

MONETARY POLICY ALTERNATIVES

Prepared for the Federal Open Market Committee By the staff

Board of Governors of the Federal Reserve System

STRICTLY CONFIDENTIAL (FR)

November 1, 1985

CLASS I - FCMC

MONETARY POLICY ALTERNATIVES Recent Developments (1)

Averaging through unusually volatile week-to-week fluctuations,

M1 was about unchanged in October, following growth of 11-1/2 percent (annual rate) in September.

Even so, M1 by October had grown about 11-3/4 percent

at an annual rate from its second-quarter base, well above the upper bound of its 3 to 8 percent longer-run range.

The effects of Hurricane Gloria may have

added 2 to 3 percentage points to M1 growth in September and lowered M1 growth by a corresponding amount in October.

It resulted in unscheduled

closings of businesses and banks in the New York and Boston districts on Friday, September 27, and some depositors were unable to move funds out of demand deposit accounts to make either disbursements or investments over the weekend.

Judging from the weekly pattern, NOW accounts do not appear to have

been similarly affected; this component slowed further in October from an already reduced September pace.

Some of the apparent weakness of M1 in

October also may reflect a changing seasonal pattern for transactions deposits not yet captured in the official seasonal factors.

M1 also was very

weak in October 1984, and both the Board's experimental and concurrent seasonal adjustment methods show about 2 to 3 percentage points greater growth in October of this year than the official series. (2)

M2 and M3 in October both grew substantially more slowly than

the 6 to 7 percent rate established by the Committee for the September-toDecember period, owing to a moderation of their nontransactions components as well as weak M1.

Among the core deposit components of M2, inflows to MMDAs and

-2-

KEY MONETARY AGGREGATES (Seasonally adjusted annual rates of growth) July

Aug.

Sept.

Oct.pe

QIV to Oct.pe

Money and credit aggregates M1

9.3

20.3

11.5

-0.8

11.81

8.5

11.1

7.1

2.4

8.7

4.3

9.1

9.8

3.8

7.9

Domestic nonfinancial debt

11.9

11.5

10.8

11.2

12.6

Bank credit

10.2

6.9

8.6

3.0

9.3

Nonborrowed reserves 3

10.6

19.5

5.1

6.5

15.5

Total reserves

12.2

16.5

8.7

4.5

14.6

Mbnetary base

6.8

13.3

7.0

6.0

8.7

Adjustment and seasonal borrowing

600

503

633

5334

Excess reserves

855

827

668

7475

Reserve measures 2

Memo:

(Millions of dollars)

pe--preliminary estimate. NOTE: Monthly reserves measures, including excess reserves and borrowing, are calculated by prorating averages for 2-week reserves maintenance periods that overlap months. 1. Growth from the is 11.4 percent. 2. Growth rates of tinuities resulting Control Act. 3. Includes "other 4. Average through 5. Average through

second quarter to October.

Growth from QIV to October

reserve measures are adjusted to remove the effect of disconfrom phased changes in reserve ratios under the Monetary extended credit" from the Federal Reserve. October 30. October 23.

savings deposits were,

like NOW accounts, much lower in September and

October compared with the preceding months; less funds appeared to be shifting into these accounts from small time deposits, whose rate of decline moderated considerably.

The non-M2 cmponent of M3 also slowed in October,

although issuance of large CDs remained very strong as commercial banks compensated for a sharp decline in Treasury deposits.

By October M2 had

moved a little below the upper end of its annual target range, while M3 remained around the middle of its long-run range. (3)

Growth of domestic nonfinancial debt has been affected by

offsetting, and in some cases transient, forces in the recent period.

Trea-

sury cash borrowing has been delayed by the extended Congressional inaction on the debt ceiling; an unprecedented disinvestment of trust funds permitted a sizable financing to be paid on November 1 and 4, however.

Very heavy tax-

exempt bond issuance has continued unabated, as interest rates have remained favorable for advance refunding and fears of new tax law constraints after year-end encouraged both refunding and private-purpose issuance.

Based on

partial data, consumer credit appeared to surge in September, as auto sales were sparked by special incentives at captive finance companies, but preliminary bank data for October suggest a moderating underlying trend.

Mortgage

debt growth, on the other hand, appears to be continuing at the stronger pace seen since spring.

In the nonfinancial business sector, short-term credit

demands remain weak, but bond issuance picked up again in late October after a dip in September.

On balance, partial data suggest growth of total non-

financial sector debt of around 11 percent over the past two months.

From

the fourth quarter of last year to October, debt is estimated to have risen at a 12-1/2 percent annual rate, somewhat above the upper end of its annual monitoring range.

-4(4)

Growth of total reserves slowed in October to a 4-1/2 percent

pace in association with the marked deceleration in transactions accounts. Nonborrowed reserves, however, rose somewhat more rapidly than total reserves as discount window borrowing fell off following a temporary bulge at the end of September.

Subsequent to the FOMC meeting, the nonborrowed reserves path

was constructed with an allowance for $500 million of adjustment plus seasonal borrowing, and over the intermeeting period borrowing has averaged very close to this level, though fluctuating from week to week. (5)

The federal funds rate has varied around 8 percent over the

intermeeting period, a little higher than its average in September.

With the

Treasury replenishing the supply of bills early in the intermeeting period, short-term bill rates are about 10 to 20 basis points above their levels at the time of the last FOMC meeting.

Private short-term rates, on the other

hand, have declined somewhat on balance over the intermeeting period, and yields on long-term bonds are down about 1/4 of a percentage point, helped by favorable inflation news, weakness in some economic indicators, and latterly by expectations of an easier stance of monetary policy.

Continuing concerns

about the financial condition of the Federal Farm Credit System have resulted in a moderate further widening of the spreads between Farm Credit and comparable-maturity Treasury securities over the intermeeting period; a 6-month issue sold this week was trading at a premium of nearly 100 basis points over Treasury securities, about 15 to 20 basis points more than on a similar issue in late September. (6)

The trade-weighted average value of the dollar has declined

about 1-1/2 percent further on balance since the day of the last FOMC meeting, for a total drop of 8 percent since the G-5 announcement on September 22. The dollar's value held fairly firm over most of the intermeeting period

-5.

Toward the end of the period,

the dollar eased further, especially relative to the yen, bringing its decline against that currency to about 12-1/2 percent since the G-5 announcement.

The

Bank of Japan announced that it would not accomodate year-end demands for liquidity, whereupon interest rates on yen instruments rose sharply.

The

Desk has sold $2.8 billion since the last meeting, $1.7 billion for marks and $1.1 billion for yen.

Desk activity since the G-5 announcement has totaled

sales of $3.2 billion, $1.8 billion for marks and $1.4 billion for yen, divided equally between the accounts of the System and the Treasury.

Policy alternatives (7)

The table below gives three alternative specifications

for growth in the monetary aggregates from September to December and associated federal funds rate ranges.

(More detailed data can be found

on the charts and table on the following pages.

The detailed table

includes growth rates implied by each alternative from October to December and from the base of the long-term ranges to the fourth-quarter average.) Alt. A

Alt. B

Alt. C

5-1/4

4-1/2

6-1/2

5-1/2

5 to 9

6 to 10

7 to 11

Growth from September to December

Associated federal funds rate range (8)

Under all three alternatives, M1 growth over November and

December would be expected to pick up following the flat October.

Al-

though M1 expansion would be expected to remain considerably slower than the pace of this summer, all of the alternatives would leave that aggregate by year-end well above the Committee's long-run range of 3 to 8 percent.

Given growth through October, M1 would have to decline at a

1-1/2 percent annual rate over the last two months of the year to hit the upper bound of the long-run range by December. possible, especially if

While such an outcome is

the weakness in demand deposits in October were

the first stage of a reversal of last summer's unexpected bulge in these deposits, it

seems unlikely absent a very sharp tightening in money

market conditions.

M2 and M3, however, are expected to remain within

their long-run ranges for the year under all three alternatives.

Alternative Levels and Growth Rates for Key Monetary Aggregates M3 M2 M1 ------------------------------------ ------------------------ -----------------------Alt. C Alt. B Alt. A Alt. C Alt. B Alt. C Alt. A Alt. B Alt. A 1985--July August September October November December

595.8 605.9 611.7

2490.5 2513.6 2528.4

3114.1 3137.6 3163.3

611.3 616.0 621.0

611.3 615.6 619.5

611.3 615.2 618.0

2533.4 2547.8 2567.2

2533.4 2546.8 2562.2

2533.4 2545.7 2557.2

3173.2 3191.9 3215.5

3173.2 3190.8 3210.5

3173.2 3189.6 3205.6

9.3 20.3 11.5

8.5 11.1 7.1

4.3 9.1 9.8

-0.8 9.2 9.7

-0.8 8.4 7.6

-0.8 7.7 5.5

2.4 6.8 9.1

2.4 6.3 7.3

2.4 5.8 5.4

3.8 7.1 8.9

3.8 6.7 7.4

3.8 6.2 6.0

10.6 10.2 15.0 7.7

10.6 10.2 15.0 7.3

10.6 10.2 15.0 6.8

12.1 5.3 10.2 6.2

12.1 5.3 10.2 5.8

12.1 5.3 10.2 5.5

10.7 5.2 7.8 7.0

10.7 5.2 7.8 6.8

10.7 5.2 7.8 6.5

6.1 9.5

5.1 8.0

4.1 6.6

6.1 8.0

5.3 6.8

4.6 5.6

6.6 8.0

6.0 7.1

5.4 6.1

11.5

11.3

11.1

8.7

8.6

8.5

7.9

7.8

Growth Rates Monthly 1985--July August September October November December Growth Rates 1985--QI 02 Q3 Q4 1985 Sept. to Dec. 1985 Oct. to Dec. Long-run base period to 04 85

Chart 1

ACTUAL AND TARGETED M1 IIll lons of dol aIr

I 640

630

ACTUAL LEVEL PROJECTED LEVEL SHORT RUN ALTERNATIVES

620

610

600

590

580

570

560

550

I 1

N 1984

1985

540

Chart 2

ACTUAL AND TARGETED M2 BilI ons of dol lre

12650

2600 -ACTUAL LEVEL --- PROJECTED LEVEL * SHORT RUN ALTERNATIVES

2550

-1 2500

-- 2450

2400 .. -~%

-- 2350

-1 2300

III O

D N 1984

1111111

J J 1985

2250

Chart 3

ACTUAL AND TARGETED M3 Bil Ilons of dol Ire

13350

ACTUAL LEVEL

PROJECTED LEVEL SHORT RUN ALTERNATIVES

3250

a •

3150

3050

-- 2950

N 1984

1985

2850

Chart 4

DEBT BIl IIons of doll r

1 6800

-ACTUAL LEVEL -- PROJECTED LEVEL

-I 6600

6400

-- 6200

•o

-- 6000

•

-- 5800

SN 1984

II.

1985

I. .

5600

-8(9)

Alternative B contemplates maintenance of about the current

degree of pressure on reserve positions, indexed by discount window borrowing of $450 to $550 million, with federal funds continuing to trade around 8 percent.

Nonborrowed and total reserves would be expected to grow at

roughly a 4 percent annual rate over the last two months of the year.

under these conditions would probably increase at about an 8 percent annual rate over November and December, bringing growth over the last three months of the year to 5 percent and growth from the second quarter through December to 11 percent.1

Demand deposits are projected to increase only slightly on

balance over the remainder of the year, while NOW account growth should remain below the unusually rapid advance of the summer.

On a quarterly

average basis, M1 would increase at a 7-1/4 percent annual rate in the fourth quarter.

Given the greenbook GNP forecast, this implies a further

drop in velocity, though at only about a one percent annual rate. behavior of velocity would still

This

be a bit weaker than predicted by most

models of money demand, although the disparity would be considerably narrower than in the third quarter. (10)

Growth of the broader aggregates under alternative B

would be at the lower end of, or somewhat below, the 6 to 7 percent annual rate for September to December adopted at the previous meeting.

M2 would

be expected to grow by 5-1/4 percent over the period, with its nontransactions as well as M1 components picking up in November and December from their relatively sluggish pace in October.

Stronger expansion of core

deposits in the nontransactions component than in recent months is 1.

Although, as noted above in paragraph 1, concurrent seasonal adjustment yields M1 growth for October that is several percentage points faster than the current seasonal factors, it has very little effect on the seasonally adjusted growth rate for the second half of this year, calculated using the specifications of alternative B.

-9anticipated, partly in association with somewhat greater household saving in the fourth quarter.

M3 would be expected to increase at a 6 percent

annual rate from September to December.

Issuance of the managed liabili-

ties in M3 over the balance of the year should decline from the rapid pace in September and October, as asset expansion at banks remains fairly moderate and Treasury deposits rebound once the debt ceiling is lifted. For the year as a whole, M2 growth under this alternative would be around 8-1/2 percent, somewhat below the upper end of its long-run range, while M3 growth of 7-3/4 percent would be at the midpoint of its long-run range. (11)

With federal funds continuing to trade around 8 percent

under alternative B, other short-term interest rates would probably show little net change over the intermeeting period.

The foreign exchange

value of the dollar also might tend to remain around recent levels, or edge off particularly if incoming data suggest a relatively sluggish economy.

Under the latter circumstances,

long-term rates might decline

somewhat further on balance despite relatively strong credit demand.

The

Treasury will be in the market in volume to replenish its cash balance, depleted by debt ceiling problems, and to finance the large fourth-quarter deficit.

Private borrowing meanwhile is expected to continue at near the

third-quarter pace.

Business credit usage is

likely to strengthen as

inventories are rebuilt and in response to enlarged merger activity. Household borrowing, however, should moderate, reflecting a drop-off in consumer durable spending.

All in all, the debt of nonfinancial sectors

is projected to increase at an annual rate of a little more than 13 percent over the fourth quarter, bringing growth for the year on a quarterly average basis to nearly 13 percent.

-10(12)

Alternative A contemplates an easing of reserve pres-

sures, with discount window borrowing falling to $200 to $300 million and the federal funds rate dropping to around the 7-1/2 percent discount rate.

Growth of the monetary aggregates under this alternative would be

expected to be consistent with the 6 to 7 percent range for the SeptemberDecember period adopted for all three aggregates at the last meeting.

would increase at a 9-1/2 percent annual rate over the last two months of the year, and growth from the second quarter base of its long-run range would remain above 11 percent through December.

A somewhat larger increase

cannot be ruled out, though, as the spread of market rates over NOW account rates narrows further into a range where we have had limited experience with saver response in the NOW account era.

M2 growth would

also be stronger, bringing this aggregate closer to, though still

little below, the upper end of its range; flows into MMDAs and money market funds would accelerate as rates on these instruments lagged the decline in market rates.

The pickup in M3, on the other hand, might be

restrained as business loan demand at banks was held down by a greater issuance of bonds. (13) be appreciable.

The drop in market interest rates under alternative A may The 3-onth Treasury bill rate could fall to 6-3/4

percent, or perhaps somewhat lower if became widespread.

expectations of a discount rate cut

The large volume of Treasury coupon issues expected

over the next few weeks would be easily absorbed by strong investor demand to lock in relatively high yields.

The dollar would probably drop

noticeably further on foreign exchange markets. (14)

Alternative C assumes an increase in borrowing at the

discount window to the $700 to $800 million area, which would be expected

-11to involve federal funds trading around 8-1/2 percent.

The tightening of

reserve conditions under this alternative would be expected to constrain M1 growth to a 4 percent annual rate from September to December, bringing this aggregate closer to, though still

well above, its longer-term range.

In addition there would be greater assurance that M2 would be within its

long-run range for the year.

An increase in the federal funds rate

in the near term is not now expected by the market, and consequently other interest rates would move sharply higher under this alternative, particularly in the short run as the market works through the large volume of Treasury issues.

The dollar could come under considerable upward pressure

in foreign exchange markets.

Both long-term interest rates and the

dollar could retrace some of their immediate rise, however, if data suggested weakness in the economy.

incoming

-12-

Directive language (15)

Proposed language is

shown below not only for the

operational paragraph of the directive but also for a special paragraph dealing with the long-run ranges for this year. at its October 1 meeting that it range in November.

The Committee indicated

might wish to review the M1 long-run

The added paragraph in that connection, shown immedi-

ately below, could be placed in the directive just before the operational paragraph.

Should the Committee add this paragraph, it

may wish to consider

deletion in the operating paragraph of the qualifying language in brackets that relates to Ml alone; with the new paragraph there may be less reason or need for indicating that the response to unexpectedly slow growth of M1 in the fourth quarter would be conditioned by the rapid growth last summer. PROPOSED ADDITIONAL PARAGRAPH ON 1985 RANGES AT THIS MEETING THE COMMITTEE REVIEWED THE LONG-RUN RANGES FOR THE MONETARY AGGREGATES FOR 1985, PARTICULARLY THE RANGE FOR M1 ESTABLISHED IN JULY.

TAKING ACCOUNT OF THE FURTHER SHARP DROP IN

Ml VELOCITY IN THE THIRD QUARTER, EVIDENCE OF A SHIFT IN PREFERENCES BY THE PUBLIC TOWARD HIGHLY LIQUID ASSETS, AND EXPANSION OF THE BROADER AGGREGATES WITHIN THEIR RANGES, THE COMMITTEE AGREED THAT GROWTH OF M1 ABOVE THE 3 TO 8 PERCENT RANGE COVERING THE PERIOD FROM THE SECOND QUARTER TO THE FOURTH QUARTER OF 1985 WOULD BE ACCEPTABLE (APPROPRIATE).

THE COMMITTEE REAFFIRMED ITS EARLIER

VIEWS WITH RESPECT TO THE RANGES FOR THE OTHER AGGREGATES. OPERATIONAL PARAGRAPH In the implementation of policy for the immediate future, the Committee seeks to DECREASE SOMEWHAT (Alt. A)/ maintain

-13(Alt. B)/ INCREASE SOMEWHAT (Alt. C) the EXISTING degree of pressure on reserve positions [DEL: sought

in recent weeks].

This action is expected to be consistent with growth in M2 and M3 over the period from September to December at annual rates of about [DEL: 6-to 7]____AND ____percent RESPECTIVELY. A marked slowing of M1 growth over the period to an annual rate of around [DEL: 6-to-7] ____

percent is also anticipated;

[slower growth [DEL: over the next three months]would be acceptable in the context of satisfactory economic performance, [DEL: recent] very rapid growth in M1 OVER THE SUMMER.]

given

Somewhat

greater or lesser reserve restraint would be acceptable depending on behavior of the aggregates, taking account of appraisals of the strength of the business expansion, developments in foreign exchange markets, progress against inflation, and conditions in domestic and international credit markets. sultation if

The Chairman may call for Committee conappears to the Manager for Domestic

Operations that reserve conditions during the period before the next meeting are likely to be associated with a federal funds rate persistently outside a range of[DEL: 6to 10] ____ TO

percent.

Selected Interest Rates Percent November 4, 1985

Short-Tenm S

federal 1

Long-Term

Treasury bills

CDs

eonday market

secondary 5

comm

bank

U.S. govm

copw

ent constant

market

prim

maturity yields

home mortgages

mun-

A utility

cipal

conven

S&L

1984--High Lor

11.77 7.95

10.65 7.71

10.76 8.01

11.09 8.39

11.71 8.24

11.35 8.04

10.72 8.38

13.00 11.00

13-44

13-84

13 81

15.40

10.39

11.30

11.36

12.70

11.44 9.86

14.68 13.14

14.00 12.50

12.31 10.81

1985--igh LOw

8.75 7.13

8.65 6.77

9.03 6.92

9.21 7.07

9.13 7.34

8.83 7.22

8.31 7.00

10.75 9.50

11.19 8.83

11.95 10.00

11-89 10.30

13.23 11.37

10.31 9.13

13.29 12.03

13.00 11.50

11.14 9.47

1984--Sept.

11.30

10.37

10.47

10.51

11.29

11.11

10.62

12.97

12.34

12.52

12.29

13.86

10.54

14.35

13.50

12.00

Dec.

9.99 9.43 8.38

9.74 8.61 8.06

9.87 8.81 8.28

9.93 9.01 8.60

10.38 9.18 8.60

10.05 9.01 8.39

10.16 9.34 8.55

12.58 11.77 11.06

11.85 10.90 10.56

12.16 11.57 11.50

11.98 11.56 11.52

13.52 12.98 12.88

10.77 10.69 10.40

14.13 13.64 13.18

13.38 12.75 12.50

11.96 11.54 11.01

1985--Jan. Feb. Mar.

8.35 8.50 8.58

7.76 8.27 8.52

8.00 8.39 8.90

8.33 8.56 9.06

8.14 8.69 9.02

7.99 8.46 8.74

8.00 7.80 7.97

10.61 10.50 10.50

10.43 10.55 11.05

11.38 11.51 11.86

11.45 11.47 11.81

12.78 12.76 13.17

9.96 10.07 10.23

13.08 12.92 13.17

12.50 12.50 12.63

10.84 10.63 10.92

Aptr. Kay June

8.27 7.97 7.53

7.95 7.48 6.95

8.23 7.65 7.09

8.44 7.85 7.27

8.49 7.92 7.44

8.31 7.80 7.34

7.97 7.71 7.21

10.50 10.31 9.78

10.49 9.75 9.05

11.43 10.85 10.16

11.47 11.05 10.45

12.75 12.25 11.60

9.85 9.46 9.18

13.20 12.91 12.21

12.75 12.30 11.50

10.83 10.56 9.89

July Aug. Sept.

7.88 7.90 7.92

7.08 7.14 7.10

7.20 7.32 7.27

7.31 7.48 7.51

7.64 7.81 7.93

7.58 7.83

7.03 7.08 7.10

9.50 9.50 9.50

9.18 9.31 9.37

10.31 10.33 10.37

10.50 10.56 10.61

11.64 11.76 11.87

9.20 9.44 9.61

12.06 12.19 12.19

11.50 11.50 11.50

9.68 9.52 9.52

7.77 7.88 7.64

7.03 7.21 7.23

7.15 7.32 7.39

7,27 7.43 7.51

7.59 7.75 7.78

7.51 7.68 7.69

7.01 7.00 7.00

9.50 9.50 9.50

9.08 9.34 9.46

10.19 10.42 10.60

10.39 10.57 10.73

11.62 11.81 11.83

9.13 9.25 9.35

11.94 12.03 12.17

11.50 11.50 11.50

9.56 9.73 9.62

7 16 21 28

7.92 7.88 8.06 7.78

7.26 7.13 7.12 7.05

7.46 7.36 7.29 7.18

7.61 7.51 7.44 7.39

7.85 7.79 7.83 7.77

7.78 7.71 7.73 7.69

7.05 7.05 7.14 7.07

9.50 9.50 9.50 9.50

9.54 9.31 9.21 9.19

10.60 10.40 10.23 10.14

10.72 10.64 10.52 10.42

11.78 11.82 11.70 11.73

9.40 9.47 9.45 9.43

12.23 12.24 12.18 12.11

11.50 11.50 11.50 11.50

9.57 9.47 9.59 9.45

Sept. 4 11 18 25

7.88 7.80 7.85 7.96

7.09 7.22 7.19 6.94

7.25 7.40 7.37 7.14

7.43 7.60 7.57 7.42

7.82 7.93 8.01 7.90

7.74 7.81 7.93 7.80

7.07 7.05 7.12 7.18

9.50 9.50 9.50 9.50

9.27 9.49 9.45 9.29

10.20 10.45 10.43 10.36

10.43 10.68 10.65 10.61

11.89 11.92 11.91 11.80

9.41 9.60 9.69 9.74

12.15 12.24 12.21 12.17

11.50 11.50 11.50 11.50

9.52 9.57 9.51 9.49

Oct.

2 9 16 23 30

8.12 7.84 8.03 8.14 7.89

7.01 7.08 7.21 7.20 7.22

7.11 7.31 7.36 7.33 7.38

7.39 7.46 7.48 7.43 7.47

7.84 7.85 7.92 7.91 7.90

7.76 7.74 7.87 7.85 7.81

7.11 7.09 7.14 7.16 7.11

9.50 9.50 9.50 9.50 9.50

9.22 9.32 9.33 9.20 9.20

10.28 10.37 10.31 10.16 10.14

10.55 10.63 10.58 10.43 10.41

11.92 11.96 11.81 11.73 11.52

9.72 9.61 9.52 9.47 9.40

12.17 12.17 12.13 12.07 12.01

11.50 11.50 11.50 11.50 11.50

9.53 9.66 9.51 9.48 9.30

Daily--Oct. 25 31

7.87 8.08

7.24 7.19

7.42 7.29

7.51 7.37

7.94 7.75

7.85 7.72

9.50 9.50

9.25 9.06

10.21 10.01

10.47 10.28

7.20

7.29

7.37

7.78

7.82

9.50

9.05p

Oct.

1985--July 17 24 31 Aug.

Nov.

8. 5p

7.73

NOTE: Weekly data for columns 1 through 11 are statement week averages. Data In column 7 are taken from Donoghue's Money Fund Report. Columns 12 and 13 are 1-day quotes for Friday and Thursday. respectively, totowing the end of the statement week. Column 13 Is the Bond Buyer revenue index. Column 14 1i an average of contract Interest rates on new commitments for conventioonl first mortgages with 80 percent loan-to-value

9.98p

10. 5p

ratios at a sample of savings and loan associations on the Friday following the end of the staement week. Column 18 Is the verage initial contlact rate on new commitments for one-year ARMs at those institutlons offering both fixed- and adjustable-rate mortgages with the same number of discount points. FR 1367 (I/85)

Money and Credit Aggregate Measures Nov.

Seasonally adjusted

Perlod

PERCENT

AIUALLY

Money stock measures and liquid assets nontrsnsectlons components In M2 in M3 only 3 4

Bank credit total loans M3

and Invesltment ' i_ 7

1985

Domestic nonllnancial debt U.S. goernment2

other

totalh 10

ANNUAL GIOIH: (0U1 TO UI0) 8.8 10.4 5.2

9.1 12.2 1.7

9.3 12.8 0.6

13.6 1.1 22.1

10.0 10.0 10.1

10.2 10.5 11.8

3.2 10.6 10.2 15.0

9.1 12.1 5.J 10.2

10I.9 12.5 3.8 8.7

10.7 5.5 4.0 -1.6

11.0 10.7 5.2 7.8

9.6 10.0 5.8 3.20

198--OCT. NOV. DEC.

-7.0 12.0 10.2

5.7 14.0 13.0

9.6 14.6 13.9

26.7 15.5 19.0

10.0 14.3 11.k

1985--JAl. FEE. HAR. APB. nit JUNE JULI AUG. SEPT. OCT. PE

9.0 14.3 5.7 5.9 14.0 19. 9.3 20.3 11.5 -0.0

13.0 11.1 4.J -0.9 8.5 1J.7 0.5 1.1 7.1 2.4

15.2 10.1 J.8 -3.1 6.9 11.9 8.3 0.2 5.7 3.

-3.J -3.1 12.2 5.0 14.2 -2.1 -12.2 0.8 20.0 9.5

581.6 591.2 595.8 605.9 611.7

2461.9 2472.9 2490.S 2513.6 2528.4

1863.3 18U1.7 1U094.7 1907.7 1916.7

631.1 630.0 623.6 624.0 6314.8

1982 1903 1984 QUARTERLI AVERAGE 1904 4TH .TR. IST QTR. 1985 2ND UTB. 1905 1985 3RD yTr.

2.2

9.1 11.2 14.1

0.2 1oU. 10.

17.3 21.5 15.5

13.6

9.2 9.9 9.6 9.5

16.1 15.3 12.6 14.2

13.3 13.0 I. 11.0

7.4 9.8 12.9

6.6 1J.0 9.7

13.5 20.3 17.5

13.1 14.1 15.

13., 16.0 15.6

10.2 8.1 5.9 0.3 7.6 10.5 4.3 9.1 9.8 J.U

7.7 10.6 9.3 0.6 5.1 9.5 5.7

6.4 12.7 11.4 4.1 1.3 9.J 10.1 6.9 9.0 3.0

15.. 12.8 8.7 12.1 15.8 13.8 16.0 IJ.7 7.80

12.9 10.7 11.1 II.6 11.1 1 .. 10.7 10.6 11.1

13.5 11.2 10.6 11.9 12.2 1 1. 11.9 11.5 0.4

3076.0 310. . 3111. 1 3137.6 3163.3

3640.2 3669.0 3686.4

1785.3 1799.1 18d4.3 1124.0 1838.5

1442.9 1459.5 1478.9 1495.8. 1505d.

4783.3 462t7.6 4870.7 4914.6 4960.1

6226.2 6a07.3 63419.7 6410.3 6406.6

4.5

14.0 11.

13.6 1. 11.8

HOTHOLI

MONTHLY LEVELS

I(BILLIONS)

1985--MAI JUNE JULY AUG. SEPT.

VEEKLT LEVELS 1985--5SEP.

OCT.

1/ 2/

(SBILLINIS)

2 9 16 23 JO

609.5 613.7 610.2 609.6 614.8

7 14P 21P

611.9 605.1 613.6

ANNUAL RATES FOB LANK CEDIT ARE IADJUSTED bEGiNNINII SEPTEMBER 26. 19:4. DIEbT DATA ARE ON A MONTIUL AVENAGE ASIS, TO REMOVE DISLONTINU1IIES. P-PLELI MINA PE-PEELIMINAh ES2IRAIE

FOR A TBANSFER DSHIVED

OF LOANS FKOH CCNINEIBLTIL

AVEMAGING

IID-Of-,O'L

ILL1NOI

NAILOIAL khAi

LEVELS OF ADJACLNM

BO11HS,

2181

rL HlAf

LIC ttEE

ALJUSELL

Components of Money Stock and Related Measures NOV.

Seasonally adjusted unlessotherwise noted Small

Period

Cunrency

X ANNUAL GROVTH: ANNUALLT(U4 TO C4) 1982 198) 1984

21P

7.2

4.5 -13.7 -6.3

5.2 -10.3 13.5

31.1 -26.3 17.0

34.0 28.5 10.5

19.4 31.7 7.3

46.7 -16.6 33.6 97.4 31.2 7.7 1.3

1Z2

10.1

-4.0

-2.0 26.0

39.1 45.6

21.3 8.2

-0. 1 4.6

20. 16.9 26.i

5.0 38.3

11.0 0.7 -1.8

18.4 9.0 6.4 -3.3

11.5 0.2 5.0 -4.4

28.1 32.7 -0.7 3.9

-14.5 11.3 8.8

-3.4 17.8 17.5

2.1 27.5 -10.3

10.5 31.8 37.9

-8. -7.8 -8.7

I.* 11.4 8.0

27.6 49.4 40.7

135.6 140.2 90.6

27.9 16.3 16. 1

2.4 12.5 1.0 2.9 15.7 23.0 0.9 14.3 12.7 -12.6

24.7 22.6 14.2 13.j 15.5 22.9 24.7 38. 1 16.4 9.8

108.3 129.9 -24.1

0.0 3.3

31.5 22.3 17.1

92.9 -18.8 -9.5 69.1 9.1 5.4

53.8 40.4 25.7 6,J 9.1 29.2 22.2 19.6 10.7 11. 7 11.6

2.0 6.9 12.3 10.5 2. 5

167.1 167.9

264.0 266.8

168.8 71. 1

66.1 66.6

167.5 167. 7 167.9 168. I 168.0

265.9 267.8 265.1 265.0 271.3

170.2 172.3 171.3 170. 169.6

168.3 168.6 169.0

266.4 259.9 265.7

171.4 170.8 173.0

JUNE JULt AUG. SEPT. OCT. PB

7 21P

-8.2 -2.3 1.1 13.3

HAT

OCT.

9.7

-3.3 6.3 11.6 16.0 17.4 5.6 11.5

9.1 3.0 -7.6 -13.4 -5.1 -3.8

-27.2 22.3 2.7 6.1 -2.0 2.0

44.0 -51.7 -52.1 2.0 78.5 68.0 -37.6 -25.8 -24.5 17.

491.8 496.2

300.3 301.7

878.6 874.9

176.7 176.4

63.6 62.3

65.0 66.0 64.4 66.1 70.5

494.2 49b.8 497.3 495.3 495.0

CB'S 124.2 124.5 124.7 124.8 124.6

ONLY 383.3 382.6

62.9 63.0 64.3 62.0

383.0

176.8 116.0 176.5 176.8 176.3

67.2 65.6 66.8

498.5 500. 4 500.8

125.0 125.1 125.2

382.7 381.9 381.7

175.9 177.2 177.0 177.0

62.5 63.5q 63=5 63. 63.41

-154.8

-5.0

-3.3

-9.5

Shortterm Commr1T asury cll paper securities

Tem RPS NSA

12.9 4J. 1 17.7 20.8

R*.B.

Large

2.1 65.4 -28.7 19.3

1985-JAN. FEB.

1985

denomlnation llme deposits'

8.5 21.1 16.1 25.9

DEC.

EEKLY 1985-SEPI. 2 9 16

Savings deposits

-1.0 7.0 8.6 11.9

IONTHLI 1984-OCT.

LEVELS (SBILLIOIS) 1985-10LU. SEPT.

MMDAs NSA

denomlnatlon time deposits '

0.9 2.7 1.1

QUARTEBLI AVERAGB 4IT UT0. 1984 1ST T. 1985 2ND UQT. 1985 3JD QT1. 1985

Money market mutual funds, NSA genrral Institupurpose lions d brokel only dealer 8 9

Other Ovrnlght Demnd checkable RPs and deotlls depoall Eurodollar NSA

39.6 -19.5

16.2 -11.0

Term Eurodollar NSA

-8.3

-0.8 -39.5 15.1 -3.7 6.6 -2.8 25.81 -13.3P

-70.1

1.6 3.3 J.2

-1.1

6.9 37.0

-51.3 -61.6 -33.9

4.9

-2.2 16.2 24.9 8.3 -4.3 33.8

-16.3 39.1 -6.4

-14.5 50.0

-. 1 -27.8

-8. I -40.9 -6.9 -14.9

-17.0 -80.9

-12.2 3.7 19.7 13.5

5,.2 -51.7 -33.1 -35.S 46.2 41.0 -13.8

-28.9 3.0 50.2 -5b. 7 1.5 -37. I -27.6 -7.8 I1.1 -12.5

421.2 428.1

62.4 69.)

76.0 76.2

-11.2

24.5

3.3 11.0 5.4 6.9 5.2P -58.61

11.1 17.6

5U.4

4.2

Bankers acceplances

-22.6 2.4 -12.1 -17.5

Il.4

58.0

Savings bonds

8. I

6. 4 8.O 6.3 6.3 I.6

-3.6

4.8

46.6

ABI

SULIALY2CI

CB'S ONLY 269.2 35.5 270.6 33.6 273.3 34.1 273.4 33. 1 274.0 33.1 3J. 5 31,5 276.8 277.2 J2.7 32.7 275.8 32.1 275.8 32.1

INCLUDES RETAIL BEPUNCHASE AGBEEHENTS. ALL IRB AND KEOGH ACCOUMIS AT CO8BEICIAL EANKS AND 21IErI J NS1JIUIlJQS PFRO SIALL lINE DEPOSitS. EXCLUDES IRA AND KEGGH ACCOUNIS. NEI OF LARGE DENOMILAIION TIME DEPOSITS HELD UI HOMET MARKET MUTUAL FUNDS IAC IHBIFT ISIiSUlICMS. P-PRELIHINARB PE-PRELLaNAiT E51IIMAl

STRICTLY CONFIDENTIAL (FR) CLASS II-FOMC

Net Changes in System Holdings of Securities 1 Millions of dollars, not seasonally adjusted

November 4, 1985 Federal agencies net purchases'

coupons net purchases

TrTreasury

within

Penwodithin 1 year ne hag'

-3,052

1980 1981 1982 1983 1984

5.337 5,698 13,068 3,779

5-10

1-5

1 1 ea

over 10

total

1-year

5-10

1-5

over 10

total

Net change outright holdings total'

Net RPs'

I-Lt

2,138 1,702 1,794 1 896 1,938

4,564 2,768 2,803 3,653 3,440

2,035 8,491 8,312 16,342 6,964

2,462 684 1,461 -5 445 1,450

808

1,918 169 6,432

70 1,982 -316 462 -350 -3,446

491 -424 4,880

1,130

1,484 600 1,657

-2,044 7,183 4,377

465 846 6

1,326 1,295 -339

-735 8,409 3,962

-138

465

1,426

1,289

Apr. May June

6,026 -942 2,099

846

1,295

7,321 -951 2,039

6,141 -9,257 2,766

July Aug. Sept.

-200 3,056 1,521

-246 3,038 1,171

-1,815 -53 -1,578

1984--QTR. II III IV 1985--QTR.

I II III

1985--Mar.

1985--Aug.

7 14 21 28

68 524 32 155

Sept.

4 11 18 25

2,615 10 307 510

Oct.

2 9 16 23 30

356

-265

78.2

LEVEL--Oct.

--- 12 -350

34.9

14.9

21.5

1 Change from end of period to end of period 2 Outright transactions in market and with foreign accounts, and redemptions (-) in bill auctions 3 Outright transactions in market and with foreign accounts, and short term notes acquired in exchange for maturing bills Excludes redemptions, maturity shifts, rollovers of maturing coupon issues, and direct Treasury borrowing from the System 4 Outright transactions in market and with foreign accounts only Excludes redemptions and maturity shifts

-350

90.5

2.5

4.2

1.2

8.2

-318

79 494 32 155

406 1,369 -1.669 2,224

2,615 10 307 510

813 1,207 -5,192 4,785

-265

-5,445 1,970 -1,563 -1,977 -10,048

182.8

-5.9

5 In addition to the net purchase of securities, also reflects changes in System holdings of bankers' acceptances, direct Treasury borrowing from the System and redemptions (-) of agency and Treasury coupon issues 6 Includes changes in RPs (+), matched sale purchase transactions (-), and matched purchase sale transactions (+)

Cite this document

APA

Federal Reserve (1985, November 4). Bluebook. Bluebooks, Federal Reserve. https://whenthefedspeaks.com/doc/bluebook_19851105

BibTeX

@misc{wtfs_bluebook_19851105,
  author = {Federal Reserve},
  title = {Bluebook},
  year = {1985},
  month = {Nov},
  howpublished = {Bluebooks, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/bluebook_19851105},
  note = {Retrieved via When the Fed Speaks corpus}
}