bluebooks · March 27, 1995

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.

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) Class I - FOMC

March 24,

1995

MONETARY POLICY ALTERNATIVES Recent Developments1 The System tightened the stance of monetary policy fur-

(1)

ther on February 1 to contain inflation pressures amid indications that the economy was continuing to advance at a substantial pace, boosting rates of resource utilization from already high levels.

The

Board approved a 1/2 percentage point hike in the discount rate, to 5-1/4 percent, and the FOMC allowed that increase to show through fully to reserve markets, raising the intended federal funds rate to 6 percent.

Federal funds generally traded a little below the intended

level during the intermeeting period. 2

Unusually low demands for

excess reserves appear to have contributed to softness in the federal funds rate at times during the intermeeting period. (2)

The firming of reserve market conditions was anticipated

by market participants and prompted little response in market rates; the prime rate, however, was hiked another 50 basis points, to 9 percent.

As the period progressed, most market yields moved down con-

siderably in reaction to data indicating that the pace of economic expansion was slowing appreciably, as well as to testimony and other comments by Federal Reserve officials that were interpreted as suggesting that, as a consequence, the period of policy tightening might be drawing to a close.

The revision to expectations was reflected in

a substantial downward movement in futures rates on federal funds and

1. Financial market quotations in this bluebook are taken as of noon, Friday, March 24. 2. The allowance for adjustment and seasonal borrowing was left unchanged over the period at $75 million. Actual borrowing averaged slightly below its allowance.

Eurodollar deposits

(chart); making some allowance for liquidity pre-

miums, the structure of these rates suggests that market participants now expect little if any further tightening in monetary policy.

Most

short-term rates fell 15 to 30 basis points over the period, while intermediate- and longer-term yields declined 30 to 60 basis points. Broad stock price indexes climbed 5 to 7 percent to record levels in response to heightened prospects for sustained moderate economic expansion with low inflation and the associated fall in interest rates and to earnings reports that were generally stronger than expected. U.S.

capital markets were relatively undisturbed by several poten-

tially disruptive events.

The failure of Baring Brothers appeared to

have few spillover effects domestically.

News of large trading losses

at Bankers Trust reduced the price of its shares and increased the spread on its uninsured debt, but left the prices of the securities of other institutions unaffected.

Spreads on private paper more general-

ly stayed narrow over the intermeeting period.

A plunge in the for-

eign exchange value of the dollar did not appear to push up bond yields on balance, because it seemed attributable largely to the softening economic outlook. was

However, on days when the dollar's decline

sharpest, bond rates and their implied volatility moved up tem-

porarily. (3)

The dollar's foreign exchange value fell 4-3/4 percent

on a weighted-average basis against other G-10 currencies over the intermeeting period.

It fell especially steeply around the time of

the defeat of the Balanced Budget Amendment, perhaps suggesting eroding confidence in the ability of the U.S. government to address some of its serious economic concerns.

Declines against the mark and the

yen were particularly large--7 and 10-1/2 percent, respectively.

Chart 1 Federal Funds Futures

Percent

Federal Funds Futures

Percent

April Contract Jan. 31

Jan. 31

Mar. 23

I-

Jan

-I

Feb

Mar

Apr 1995

May

Jun

Jul

Aug

Eurodollar Futures

Percent

1/20

1/2

2/10 1995

3/2

3/23

Treasury Interest Rates

Percent Jarn1.31

Jan. 31 Jan..1 30-Year Bond

-J

0f-Year Note .''"

. **

3-Year Note |

Month Bill

I---^

Dec Mar 1994

June Sept 1995

Dec

Mar June Sept 1996

Dec

Implied Treasury Bond Volatility

Mar 1997

Percent

a F

J J 1994 Weekly. Daily after Jan. 31.

F M 1995

Exchange Rates

Jan. 31

J J 1994 Weekly. Daily after Jan. 31.

F M 1995

J J 1994

* Index, Jan 1994=100 Weekly. Daily after Jan. 31.

Long-term interest rates declined about 25 basis points in Germany, about half of the fall in the United States.

The mark may have bene-

fitted as well from stronger demands arising from political uncertainties in several European countries, notably Italy and Spain.

The

extent of the yen's strength against the dollar was somewhat puzzling; Japanese bond rates declined somewhat more than U.S. rates.

The de-

terioration of the Mexican political and economic situation led to a sharp depreciation of the peso against the dollar and appeared to weigh on the dollar vis-a-vis major currencies. was substantial:

Intervention activity

U.S. monetary authorities purchased $1,420 million

against marks and yen, split evenly between the System and the Treasury.

The Bank of Mexico drew $1 billion on its swap line with the Federal Reserve early in the intermeeting period and later repaid $500 million out of the proceeds of a medium-term drawing of $3 billion on its swap line with the ESF.

At this time, Mexico has outstanding

drawings of $4 billion on the ESF and $1 billion on the Federal Reserve. (4)

Following a burst of growth in January, M2 has been

nearly flat on net over the past two months, falling short of the 1-1/4 percent growth projected by the staff in the previous bluebook and leaving this aggregate a little above the lower bound of its 1-to5 percent annual range.

The weakness in M2, particularly in money

market funds, was mirrored by strengthening demands for investments

3. M1 also was about flat on net over February and March, although currency expanded at a 8-1/4 percent annual rate. Total reserves have declined at a 5-1/4 percent rate over the last two months, holding down expansion of the monetary base to a 6-1/4 percent pace.

outside of the monetary aggregates.

Investors have resumed net

purchases of shares in bond funds after a year of redemptions, and purchases of stock funds have been brisk. 5

Also, noncompetitive

tenders for Treasury securities have been heavy in recent months. Nonetheless, as in 1994, the growth of M2 has tracked that projected by the standard staff demand model.

Based on the Greenbook projection

for nominal GDP, the velocity of M2 has continued to increase in the first quarter, but less rapidly than last year. (5)

M3 has

remained more robust than M2 in recent months,

expanding at a 4 percent average pace over February and March, a little stronger than the staff expected.

This aggregate in March is

estimated to be slightly above its 0-to-4 percent range for 1995.

The

elevated growth of M3 appears to be associated with bank needs to fund loan growth.

Large time deposits have been issued at a particularly

rapid clip, and term Eurodollars and RPs have also been strong. (6)

Debt growth was relatively brisk on balance over the

first few months of the year.

Overall business borrowing has picked

up in recent months, perhaps reflecting a widening financing gap. Business loans at banks surged at a 22 percent annual rate in February on the heels of similar growth in January; some deceleration, though to a still-hefty pace, seems to be in train in March.

Commercial

paper issuance also has been strong, while issuance of corporate bonds in public markets has picked up a little.

By contrast, household

borrowing is estimated to have moderated.

Growth of consumer credit

4. M1 and M2 appear to have been depressed slightly in February and early March by delays in processing income tax refunds, which owed to stepped-up efforts by the IRS to curb fraud. 5. M2 plus stock and bond funds is estimated to have increased over February and March after declining since September.

-5-

in January was held down by weakness in auto loans.

Consumer borrow-

ing from banks slowed substantially in February, owing importantly to the virtual absence of tax-refund loans this year, but appears to have rebounded this month.

In the tax-exempt sector, the volume of bonds

outstanding likely has contracted, as bond issuance has been quite weak while retirements remain large.

Total domestic nonfinancial

sector debt is estimated to have expanded at a 6 percent pace through February, leaving this aggregate in the upper half of its 3-to-7 percent monitoring range.

MONEY, CREDIT, AND RESERVE AGGREGATES (Seasonally adjusted annual rates of growth) Dec. to

94:Q4 to

Mar. 1

Mar.

1.2

0.1

-1.2

1.9

1.7

1.5

2.8

5.1

5.0

4.5

Feb.

Mar.

-1.8

M2 M3

Money and credit aggregates

Domestic nonfinancial 7.4

6.5

5.9

10.7

6.6

5.6

6.1

6.4

6.0

4.2

9.1

8.2

7.7

Nonborrowed reserves

-2.7

-6.5

-4.0

-3.0

Total reserves

-4.2

-6.4

-5.0

-4.1

3.5

8.9

6.9

6.6

946

824

debt

Federal Nonfederal

Bank credit 2 Reserve measures

Monetary base Memo:

(Millions of dollars) Adjustment plus seasonal borrowing

Excess reserves

1. 2.

Base period to February for debt aggregates. Monthly reserve measures, including excess reserves and borrowing, are calculated by prorating averages for two-week reserve maintenance periods that overlap months. Reserve data incorporate adjustments for discontinuities associated with changes in reserve requirements. Reserve figures for March assume excess reserves average $1 billion and adjustment and seasonal borrowings average $75 million in the maintenance periods ending March 29 and April 12. Includes "other extended credit" from the Federal Reserve.

Policy alternatives (7)

Three policy alternatives are considered below.

Under

alternative B, federal funds trading would continue around 6 percent, in association with adjustment plus seasonal borrowing of $75 million. 6

Under alternative C, the federal funds rate would be in-

creased to 6-1/2 percent by raising either the borrowing allowance to $125 million or the discount rate by 50 basis points.

Alternative A,

involving a reduction of the intended funds rate to 5-1/2 percent, could be effected by lowering either the borrowing allowance to $50 million or the discount rate by 50 basis points. (8)

A key element in assessing the appropriate stance of

policy going forward is the interpretation of the causes and consequences of the sizeable movements in prices on securities and foreign exchange markets over recent months.

As discussed in paragraph 2, the

drop in dollar interest and exchange rates seemed primarily a response to the perceived softening in aggregate demand.

The question is

whether the market reaction has been appropriate to the new information in the sense of leaving rates at levels consistent with the Committee's objectives for the economy and prices.

With an unchanged

federal funds rate in the staff forecast, interest and exchange rates close to recent levels are associated with activity growing slowly enough to move the economy back to the neighborhood of its potential and core CPI inflation flattening out at a somewhat higher rate than in 1994.

If the Committee believes such an outcome were both likely

and acceptable, then it may be inclined to leave the current level of the federal funds rate in place, as under alternative B, unless and

6. Over the upcoming intermeeting period, the borrowing allowance likely will have to be raised to reflect the normal upturn in seasonal credit in the spring of the year.

until incoming economic data or a clarification of prospective fiscal policy begin to point to a different outlook. (9)

The softer cast to recent economic data along with

statements by Federal Reserve officials have led market participants to the virtually unanimous opinion that the FOMC will keep its policy stance on hold at this Committee meeting.

Consequently, there would

likely be little change in interest rates in response to the choice of alternative B.

While sentiment in foreign exchange markets has proven

difficult to predict, no clear rationale presents itself for significant further dollar depreciation over the intermeeting period. (10)

A case for the 1/2 percentage point increase in the

federal funds rate of alternative C could be made on the grounds that, with economic activity having already overshot its potential and the persistence of the slowdown in economic growth not yet firmly established, more insurance should be taken out against a serious deterioration in inflation trends.

The risk of such an outcome would seem

even greater if it were judged that markets have overreacted, implying undesirable additional stimulus from the declines in interest and exchange rates and the rise in stock prices.

The need for prompt

further policy firming would be especially pressing to the extent that the Committee were dissatisfied with the prospects in the staff forecast for a sustained higher level of core inflation.

Judging from the

alternative simulations in the Greenbook, even a 50 basis point increase in the federal funds rate would leave the core CPI inflation rate in 1996 above that in 1994 and might not be sufficient to restore a downward tilt in subsequent years. (11)

With financial markets having built in no near-term

monetary policy tightening, choice of alternative C would come as a

surprise.

Market participants might alter their perceptions of the

Federal Reserve's longer-term intentions and likely reactions to future economic data.

The resulting higher expected path of short-

term interest rates over the intermediate term would act to raise bond rates, especially in real terms.

But for nominal yields, the more

favorable inflation prospects for the out years, and the associated reduction in expected short-term interest rates for those years, would serve as a partial offset.

The unexpected rise in U.S. real interest

rates across the term structure, other things equal, would provide support for the dollar on foreign exchange markets. (12)

The easing in reserve market conditions under alterna-

tive A could be justified if the unexpected weakness in the recent economic data were read as indicating that previous policy tightenings risked an unacceptably sharp slowdown in spending later this year-especially since a real federal funds rate remaining above its longerterm average might add to the restraint on demand already in the pipeline.

Concerns in this regard might be accentuated by the further

deterioration in the Mexican situation and repercussions on U.S. net exports.

In this view, with pressures on resources possibly abating

appreciably, the risks of worsening inflation would seem minimal.

effect, choice of alternative A would imply a view that not only have longer-term interest and exchange rates not overshot on the downside, but that policy may still be too tight to allow markets to compensate fully for oncoming economic weakness. (13)

The 50 basis point easing of the federal funds rate

under alternative A also would surprise market participants.

Both

long- and short-term rates are likely to fall substantially as a result, as would the foreign exchange value of the dollar.

Although

-10-

the Federal Reserve's anti-inflationary credibility has apparently increased over the last few months, it could begin to erode if incoming data were to indicate that inflation pressures were not abating, prompting the market to judge that the easing had been unwarranted. Under those circumstances, long-term rates would begin to retrace their initial declines, particularly if the dollar came under persistent, intense downward pressure. (14)

The table below shows staff projections of money and

debt aggregates through September under the unchanged reserve market conditions of alternative B.

(More detailed data, including money

growth rates under alternatives A and C, are shown in the table and charts on the following pages.)

From a March base, average M2 growth

would pick up to a 2-1/2 percent rate, while average M3 growth would slow to a 3 percent pace.

The projected strengthening in M2

growth, despite the staff's forecast of weaker nominal GDP expansion, reflects both a continued rise in the offering rates on deposits and the reduced attractiveness of financial assets of longer maturities owing to the lower bond yields.

Diminishing M3 growth mirrors the

7. Over the six months ending in September, M1 would be little changed. Total reserves would decline at a 4 percent pace, reflecting a runoff of transactions deposits. With further rapid expansion of currency, however, the monetary base is expected to grow at about a 7 percent rate over the period. This projection does not take into account implementation of an additional sweep program from OCDs to MMDAs that recently came to the attention of the staff. The actual implementation is uncertain both in size and timing, but as planned, would occur May 1 and involve about $3 billion. This would reduce the growth rate of M1 from March to September by 1/2 percentage point, but would have no effect on M2. 8. The staff expects that individual nonwithheld payments over the April tax season will be substantially larger than in recent years. Considerable volatility in the monthly growth rates of liquid deposits in April and May is possible, depending upon individuals' behavior in building up liquid balances in advance of the April 17 tax date and the timing of clearings of tax checks against those accounts. On (Footnote continues on next page)

anticipated moderation in bank funding needs following the outsized

burst in lending activity over the first quarter of the year.

The

bulk of this slowdown in M3 is expected to be concentrated in large time deposits.

By September, M2 would be in the lower half, and M3

near the top, of their respective 1-to-5 percent and 0-to-4 percent

annual growth ranges.

Somewhat slower growth in the monetary aggre-

gates would result from the higher opportunity costs of alternative C, while somewhat faster growth would occur under alternative A.

The

Alternative B

Growth from March to September M2 M3 M1 Domestic Nonfinancial Debt 1

2-1/2 3 1/4 4-3/4

Growth from 1994:Q4

to September M2

2-1/4

M3 M1 Domestic Nonfinancial Debt

3-3/4 1/4 5

1. February to September for debt aggregate.

effect of a 50-basis-point change in the federal funds rate on M2 growth over the six-month period would be expected to be about onehalf percentage point.

In neither a tightening nor an easing would

(Footnote continued from previous page) balance, the staff has built in somewhat stronger liquid deposits in April and somewhat weaker in May arising from the heavier final payments this year. Later refunds contribute slightly to stronger deposit growth in April as well.

M2 Alt. A Levels in Billions Jan-95 Feb-95 Mar-95 Apr-95 May-95 Jun-95 Jul-95 Aug-95 Sep-95

Alt. B

Alt. C

Alt. A

Alt. B

M1 Alt. C

Alt. A

Alt. B

Alt. C

3625.0 3621.5 3627.1 3639.8 3645.8 3655.1 3665.4 3675.1 3684.7

3625.0 3621.5 3627.1 3638.6 3642.2 3649.2 3657.4 3665.6 3673.9

3625.0 3621.5 3627.1 3637.4 3638.6 3643.3 3649.4 3656.1 3663.1

4326.4 4336.4 4354.9 4374.1 4382.9 4393.6 4405.8 4417.6 4429.6

4326.4 4336.4 4354.9 4373.4 4380.7 4389.9 4400.8 4411.8 4422.9

4326.4 4336.4 4354.9 4372.7 4378.5 4386.2 4395.9 4406.0 4416.2

1148.8 1147.1 1148.2 1150.3 1148.5 1150.2 1152.4 1154.6 1156.7

1148.8 1147.1 1148.2 1149.8 1147.0 1147.5 1148.2 1149.1 1150.0

1148.8 1147.1 1148.2 1149.3 1145.5 1144.8 1144.0 1143.6 1143.3

4.4 -1.2 1.9 4.2 2.0 3.1 3.4 3.2 3.1

4.4 -1.2 1.9 3.8 1.2 2.3 2.7 2.7 2.7

4.4 -1.2 1.9 3.4 0.4 1.6 2.0 2.2 2.3

7.1 2.8 5.1 5.3 2.4 2.9 3.3 3.2 3.3

7.1 2.8 5.1 5.1 2.0 2.5 3.0 3.0 3.0

7.1 2.8 5.1 4.9 1.6 2.1 2.7 2.8 2.8

1.0 -1.8 1.2 2.2 -1.8 1.7 2.3 2.4 2.2

1.0 -1.8 1.2 1.7 -2.9 0.5 0.7 0.9 1.0

1.0 -1.8 1.2 1.1 -4.0 -0.7 -0.8 -0.5 -0.3

Quarterly Average Growth Rates 95 Q1 1.8 2.5 95 Q2 3.1 95 Q3

1.8 2.1 2.5

1.8 1.7 1.8

4.5 4.1 3.1

4.5 3.9 2.8

4.5 3.7 2.4

0.1 0.6 1.7

0.1 0.0 0.3

0.1 -0.5 -1.0

Growth Rate From Dec-94 Dec-94 Mar-95 Mar-95

Monthly Growth Rates Jan-95 Feb-95 Mar-95 Apr-95 May-95 Jun-95 Jul-95 Aug-95 Sep-95

94 Q4 94 Q4 94 Q4 94 Q4 94 Q4

To Mar-95 Jun-95 Jun-95 Sep-95

1.7 2.4 3.1 3.2

1.7 2.1 2.4 2.6

1.7 1.7 1.8 2.0

5.0 4.3 3.6 3.4

5.0 4.1 3.2 3.1

5.0 4.0 2.9 2.8

0.1 0.4 0.7 1.5

0.1 -0.1 -0.2 0.3

0.1 -0.5 -1.2 -0.9

Mar-95 Jun-95 Sep-95

1.5 2.2 2.5

1.5 1.9 2.2

1.5 1.6 1.8

4.5 4.1 3.9

4.5 4.0 3.7

4.5 3.8 3.5

0.1 0.4 0.9

0.1 -0.0 0.2

0.1 -0.4 -0.5

2.1 2.5

1.9 2.1

1.7 1.8

4.3 3.9

4.2 3.8

4.1 3.6

0.3 0.8

0.1 0.2

95 Q2 95 Q3

1994 Target Ranges:

1.0 to 5.0

0.0 to 4.0

-0.2 -0.5

Chart 2

ACTUAL AND TARGETED M2 Billions of Dollars 1 3900

Actual Level *

Short-Run Alternative --

3850

3800

3750

3700

1% -- 3650

Oct

Oct 1994

3600

3550

3500

Dec

Feb

Apr

Jun

Aug

Oct

Dec

Feb

Dec

Feb

Apr

Jun

Aug

Oct

Dec

Feb

1995

Chart 3

ACTUAL AND TARGETED M3 Billions of Dollars

4550

Actual Level *

Short-Run Alternative 4500 4%

4450 .A

*C 4400

-4350

-4300 0%

S-

4250

4200

I Oct

Dec

1994o1995

1994

Feb

lI Apr

- I

Jun 1995

Aug

Oct

I Dec

Feb

4150

0%"

Chart 4

M1 Billions of Dollars

1 1400

Actual Level *

Short-Run Alternative 15%

1350

-- 1 1300 10%

'' '' ''

1250

1200

'' ...

.*.-...

- ,- '- "

....

..................................... B.................

1150

I I I I I I II

I I I I I Aug

1994

1995

**.

...

Dec

Feb

1100

1050

Chart 5

DEBT Billions of Dollars

1 14200

Actual Level S Projected Level -

14000

13800

--1

13600

13400

l-I

Dec 1994

I II Aug

1995

L Dec

13200

13000

12800

12600

the growth of the broader aggregates be expected to breach the upper or lower bands of their annual ranges, although M3 is virtually at the upper end of its range under alternative A. (15)

Consistent with the forecasted moderation in nominal

spending, the debt of domestic nonfinancial sectors is expected to slow to around a 4-3/4 percent pace from February to September, bringing its rate of growth from the fourth quarter of last year to 5 percent--the mid-point of its monitoring range.

Its nonfederal component

is projected to follow a virtually identical pattern.

Borrowing by

nonfinancial businesses is likely to edge off; enlarged bond issuance brought about by declines in long-term interest rates should be more than offset by an ebbing of bank lending and commercial paper issuance.

Household borrowing should moderate with spending, led by a

reduction in flows of consumer credit, which might also be affected by increased interest charges.

The tendency toward increasingly generous

provision of credit by banks and other institutional lenders might well draw to a close as rising debt service burdens and the economic slowdown begin to raise some cautionary flags about prospective credit quality.

-14-

Directive Language (16)

Presented below is draft wording for the operational

paragraph that includes the usual options for Committee consideration.

OPERATIONAL PARAGRAPH In

the implementation of policy for the im-

mediate future,

the Committee seeks to DECREASE SOME-

WHAT/MAINTAIN/increase somewhat the existing degree of pressure on reserve positions, [DEL: taking account of a possible increase

the discount

rate.] In the con-

text of the Committee's long-run objectives for price stability and sustainable economic growth, and giving careful consideration to economic, financial, and monetary developments, somewhat (SLIGHTLY) greater reserve restraint

(WOULD) (MIGHT) or somewhat

(SLIGHTLY) lesser reserve restraint would acceptable in the intermeeting period.

(MIGHT) be

The contem-

plated reserve conditions are expected to be consistent with moderate growth in M2 and M3 over coming months.

March 24, 1995 SELECTED INTEREST RATES (percent) Short-Term federal funds

Treasury bills secondary market ____ __3-monthI 6-month

_____1

Long-Term CDs secondary market

comm. paper

money market mutual

bank prime

U.S. government constant maturity yields

corporate conventional home mortgages A-utility municipal secondary primary recently Bond market market

-year

3-month

1-month

fund

loan

3-year

10-year

30-year

offered

Buyer

fixed-rate fixed-rate 14

ARM 16

94 -- High -- Low

5.85 2.97

5.70 2.94

6.26 3.12

6.73 3.35

6.31 3.11

6.11 3.11

5.12 2.68

8.50 6.00

7.79 4.44

8.00 5.70

8.13 6.25

9.05 7.16

7.37 5.49

9.57 7.02

9.25 6.97

6.79 4.12

95 -- High -- Low

5.97 5.40

5.81 5.57

6.31 5.88

6.75 5.98

6.39 6.11

6.08 5.73

5.61 5.16

9.00 8.50

7.80 6.82

7.85 7.13

7.89 7.40

8.81 8.32

6.94 6.25

9.57 8.77

9.22 8.38

6.87 6.41

3.50 3.68 4.14 4.14 4.33 4.48 4.62 4.95 5.29 5.60

3.78 4.09 4.60 4.55 4.75 4.88 5.04 5.39 5.72 6.21

4.11 4.57 5.03 4.98 5.17 5.25 5.43 5.75 6.13 6.67

3.77 4.01 4.51 4.52 4.73 4.81 5.03 5.51 5.79 6.29

3.63 3.81 4.28 4.36 4.49 4.65 4.90 5.02 5.40 6.08

2.86 3.03 3.29 3.61 3.75 3.95 4.15 4.30 4.62 5.00

6.06 6.45 6.99 7.25 7.25 7.51 7.75 7.75 8.15 8.50

5.40 5.99 6.34 6.27 6.48 6.50 6.69 7.04 7.44 7.71

6.48 6.97 7.18 7.10 7.30 7.24 7.46 7.74 7.96 7.81

6.91 7.27 7.41 7.40 7.58 7.49 7.71 7.94 8.08 7.87

7.82 8.20 8.37 8.30 8.45 8.36 8.62 8.80 8.95 8.78

6.16 6.48 6.46 6.38 6.48 6.44 6.55 6.83 7.27 7.07

7.96 8.55 8.78 8.62 8.82 8.82 8.93 9.25 9.43 9.51

7.68 8.32 8.60 8.40 8.61 8.51 8.64 8.93 9.17 9.20

4.55 4.96 5.46 5.45 5.52 5.53 5.54 5.78 6.10 6.66

Monthly Mar

Apr May

94 94

94 94 94 94 94 94 94

3.34 3.56 4.01 4.25 4.26 4.47 4.73 4.76 5.29 5.45

Jan Feb Weekly Dec Dec Dec Dec

95 95

5.53 5.92

5.71 5.77

6.21 6.03

6.59 6.28

6.24 6.16

5.86 6.05

5.17 5.36

8.50 9.00

7.66 7.25

7.78 7.47

7.85 7.61

8.75 8.55

6.84 6.45

9.40 9.13

9.15 8.83

6.82 6.68

7 14 21 28

94 94 94 94

5.47 5.48 5.56 5.45

5.67 5.70 5.51 5,51

6.15 6.26 6.20 6.22

6.57 6.73 6.64 6.73

6.26 6.31 6.26 6.30

6.07 6.11 6.09 6.05

4.91 4.97 5.04 5.12

8.50 8.50 8.50 8.50

7.62 7.72 7.69 7.79

7.82 7,81 7.80 7.81

7.92 7.88 7.85 7.83

8.78 8.79 8.75 8.78

7.17 7.02 6.99 6.97

9.50 9.47 9.53 9.50

9.15 9.25 9.18 9.18

6.56 6.75 6.79 6.75

Jan Jan Jan Jan

4 11 18 25

95 95 95 95

5.40 5.53 5.45 5.42

5.57 5.72 5.63 5.76

6.25 6.31 6.16 6.21

6.72 6.75 6.56 6.57

6.39 6.28 6.16 6.24

5.96 5.79 5.73 5.90

5.18 5.18 5.16 5.17

8.50 8.50 8.50 8.50

7.80 7.80 7.63 7.67

7.84 7.85 7.73 7.81

7.88 7.88 7.81 7.89

8.77 8.70 8.81 8.69

6.94 6.87 6.78 6.78

9.57 9.33 9.41 9.31

9.22 9.19 9.05 9.13

6.83 6.87 6.82 6.75

Feb Feb Feb Feb

1 8 15 22

95 95 95 95

5.63 5.95 5.93 5.94

5.80 5.81 5.79 5.71

6.15 6.10 6.09 5.97

6.43 6.39 6.37 6.19

6.22 6.18 6.17 6.14

6.03 6.05 6.06 6.06

5.23 5.37 5.43 5.48

8.57 9.00 9.00 9.00

7.45 7.38 7.39 7.16

7.67 7.55 7.55 7.40

7.76 7.66 7.64 7.58

8.54 8.62 8.55 8.49

6.63 6.44 6.40 6.34

9.18 9.26 9.12 8.96

8.94 8.80 8.84 8.73

6.75 6.69 6.66 6.60

Mar Mar Mar Mar

1 8 15 22

95 95 95 95

5.88 5.93 5.94 5.97

5.74 5.75 5.75 5.74

5.91 5.96 5.91 5.88

6.07 6.15 6.04 5.98

6.11 6.18 6.17 6.13

6.03 6.07 6.08 6.05

5.49 5.61 5.50 5.52

9.00 9.00 9.00 9.00

6.95 7.06 6.88

7.27 7.37 7.18

7.50 7.57 7.43

8.52 8.43 8.32

6.31 6.40 6.25

9.04 8.91 8.81

8.53 8.62 8.38

6.51 6.50 6.44

6.82

7.13

7.40

6.34

8.77

8.40

6.41

17 95 22 95 23 95

5.95 5.97 6.01

5.74 5.73 5.71

5.88 5.87 5.86

5.98 6.00 5.98

6.13 6.12 6.12

6.05 6.05 6.04

9.00

6.81 6.87 6.87

7.12 7.21 7.21

7.37 7.46 7.47

Jun Jul Aug Sep Oct Nov Dec

Daily Mar Mar Mar

9.00 9.00

NOTE: Weekly data for columns 1through 11 are statement week averages. Data in column 7 are taken from Donoghue's Money Fund Report. Columns 12,13 and 14 are 1-day quotes for Friday, Thursday or Friday, respectively, following the end of the statement week. Column 13 is the Bond Buyer revenue index. Column 14 is the FNMA purchase yield, plus loan servicing fee, on 30-day mandatory delivery commitments. Column 15 is the average contract rate on new commitments for fixed-rate mortgages (FRMs) with 80 percent loan-to-value ratios at major institutional lenders. Column 16 is the average initial contract rate on new commitments for 1-year, adjustablerate mortgages (ARMs) at major institutional lenders offering both FRMs and ARMs with the same number of discount points.

Strictly Confidential (FR)Class II FOMC

Money and Credit Aggregate Measures SeasonallyMARCH

27, 1995

Seasonallyadjusted

Period

Annual arowth rates(%): Annually (04 to 04) 1992

Money stock measures and liquid assets

Bank credit

nontransactions components

total loans

In M2

In M3 only

Domestic nonfinancial debt1

total loans M3

investments'

and

U. S. government'

other'

total

14.3

2.0

-2.3

-6.3

0.5

1.5

3.7

10.7

2.8

4.7

1993

10.5

1.7

-1.9

-2.5

1.0

1.4

5.0

8.5

4.1

5.2

1994

2.3

0.9

0.3

3.6

1.4

2.4

6.8

5.7

5.0

5.2

1994-Q1 1994-Q2 9 9 1 4-Q3

5.5 2.6 2.4

1.8 1.7 0.7

0.1 1.3 -0.1

-5.8 -1.2 8.6

0.6 1.3 1.9

2.4 1.6 1.7

8.7 6.6 7.2

7.3 5.4 3.9

5.0 4.5 4.9

5.6 4.8 4.7

1994-04

-1.2

-0.4

-0.0

13.1

1.7

3.9

4.3

5.9

5.3

5.5

4.8 4.3 1.8 0.7 3.7 5.4 -1.5 0.2 -3.0 -0.6 0.3

-1.0 3.8 2.6 1.0 -1.1 3.4 -1.1 -0.6 -1.3 0.6 1.4

-3.7 3.5 3.0 1.2 -3.3 2.4 -1.0 -1.0 -0.5 1.1 1.8

-20.1 -4.6 4.1 -4.6 15.5 11.6 1.6 12.6 19.5 9.2 13.6

-3.9 2.5 2.9 0.2 1.4 4.6 -0.7 1.4 1.9 1.9 3.3

-0.6 0.7 3.6 1.7 -0.7 5.1 -0.5 0.7 5.8 3.6 9.6

3.3 7.9 10.3 2.3 4.5 13.0 4.7 4.5 3.4 3.7 7.1

6.0 8.8 3.9 4.2 4.9 1.1 6.1 6.0 5.4 8.5 1.1

4.8 3.9 4.9 4.4 4.7 4.8 5.2 5.7 5.3 4.9 5.4

5.1 5.2 4.6 4.3 4.7 3.8 5.4 5.8 5.3 5.9 4.3

1.0 -1.8

4.4 -1.2

5.9 -0.9

21.2 23.1

7.1 2.8

4.5

11.3 4.2

2.5

6.7

5.6

1148.1

3606.1

2458.0

676.3

4282.4

5233.6

3290.7

3469.6

9386.9

12856.5

1147.5 1147.8

3607.8 3611.9

2460.3 2464.0

681.5 689.2

4289.3 4301.1

5249.5 5291.5

3300.8 3320.3

3494.1 3497.4

9425.1 9467.6

12919.2 12965.0

1148.8 1147.1

3625.0 3621.5

2476.2 2474.4

701.4 714.9

4326.4 4336.4

5311.3

3351.7 3363.5

3504.7

9520.5

13025.1

Quarterly(average)

Monthly 1994-FEB. MAR. APR. MAY JUNE JULY AUG. SEP. OCT. NOV. DEC. 1995-JAN. FEB.

Levels (Sbillions): Monthly 1994-OCT. NOV. DEC.

1995-JAN. FEB. p Weekly 1995-FEB.

MAR.

1150.4

3626.8

2476.5

705.5

4332.4

1146.8

3621.5

2474.8

710.4

4331.9

1145.5

3618.6

2473.1

713.9

4332.5

1146.2

3620.4

2474.2

726.7

4347.1

6 p 13 p

1147.2 1147.0

3617.3 3625.3

2470.1 2478.3

727.8 726.9

4345.2 4352.2

1. 2.

Adiusted for breaks caused by reclassifications. Debt data are on a monthly average basis, derived by averaging end-of-month levels of adjacent months, and have been adjusted to remove discontinuities.

p pe

preliminary preliminary estimate

Strictly Confidential (FR)Class II FOMC

Components of Money Stock and Related Measures

MARCH 27, 1995

Seasonally adjusted unless otherwise noted

Period

Currency

1 Levels

Demand deposits

Other checkable deposits

Overnight RPs and Eurodollars NSA'

Savings deposits'

Small denomination time 3 deposits 6

Money market mutual funds general nstitutions purpose and on broker/ dealer' 1 8

Large denomination time deposits

Term Ps NSA'

Term Eurodollars NSA

81.8 96.9

46.7 46.5 54.0

154.5 170.8 179.9

331.0 330.2 364.8

365.5 383.8

Short-term avings bonds

Treasury securities 1

Commercial r 14

Ban Banker ces ce 15

IDill.ions);

Annual (Q4) 1992 1993 1994

290.1 319.8 352.5

336.5 381.2 382.9

380.0 412.6 404.0

83.0 95.1 114.2

1177.5 1211.7 1157.5

882.2 790.4 806.5

359.2 357.8 384.5

205.8 196.9 180.7

358.4 334.2 357.7

Monthly 1994-FEB. MAR.

328.9 332.0

388.6 388.6

411.6 412.5

94.9 100.0

1221.9 1222.0

775.0 772.0

359.5 361.9

182.1

331.8 330.3

92.3 95.5

47.9 46.2

173.2 173.9

341.7 344.9

401.2

183.8

390.8

14.9 15.5

APR. MAY JUNE

334.5 337.3 340.0

388.1 385.6 386.3

412.0 412.4 412.5

98.9 102.5 106.8

1220.0 1214.8 1206.8

770.1 770.8 772.9

370.5 373.5 370.7

183.1 177.5 177.9

329.8 332.4 335.0

99.0 98.0 102.5

46.5 47.7 50.3

174.8 175.7 176.7

354.7 357.3 348.8

387.1 392.6 392.7

14.0 11.6 10.8

JULY AUG. SEP.

342.8 345.1 347.2

388.0 386.6 386.5

413.1 410.8 408.9

109.3 110.8 111.7

1201.2 1192.6 1183.7

775.4 780.7 786.5

375.8 376.2 376.6

178.7 177.4 176.3

338.2 341.5 347.3

103.1 101.3 102.2

51.0 51.2 52.1

177.7 178.5 179.1

353.4 357.7 350.4

392.8 387.7 391.7

10.9 11.4 11.9

OCT. NOV. DEC.

350.0 353.0 354.5

384.4 382.3 382.0

405.4 403.8 402.9

113.6 112.7 116.3

1171.0 1157.6 1143.9

796.0 806.8 816.6

379.7 384.2 389.7

180.8 180.5 180.8

353.0 357.7 362.3

102.3 103.4 105.4

53.0 55.3 53.7

179.5 179.9 180.3

355.7 365.2 373.6

404.2 404.0 426.5

11.7 10.9 10.1

357.7

383.5 384.1

399.2 395.7

124.5 119.3

1129.5

832.0 852.0

392.6 392.2

186.3 180.4

363.2 373.0

109.3 112.5

55.0 57.8

180.5

366.1

428.6

9.7

1995-JAN. FEB.

358.8

1111.8

103.7

Net of money market mutual fund holdings of these items.

Includes money market deposit accounts.

Includes retail repurchase agreements. All IRA and Keogh accounts at commercial banks and thrift institutions are subtracted from small time deposits. Excludes IRA and Keogh accounts. Net of large denomination time deposits held by money market mutual funds, depository institutions, U.S. government, and foreign banks and official institutions. preliminary

411.6

20.6 15.5 10.9

STRICTLY CONFIDENTIAL NET CHANGES IN SYSTEM HOLDINGS OF SECURITES1 Millions of dollars, not seasonally adjusted

March 24, 1995

CLASS

(FR) II-FOMC

Treasury couons Period

1992 1993 1994

13,086 17,717 17,484

1,600 -----

11,486 17,717 17,484

1,096

13,118

1,223 1,238

10,350 9,168

2,818 4,168 3,818

2,333 3,457 3,606

19,365 18,431 15,493

30,219 35,374 31,975

-13,215 5,974 -7,412

1993 ---Q1 ---02 ---Q3 ---04

7,749 1,268 8,700

1,441 2,490 3,700 2,719

716 1,147 1,297 1,008

3,141 4,990 6,028 4,273

2,851 12,648 7,067 12,807

-461 10,624 -8,644 4,455

1994 ---Q1 ---Q2 --- 03 ---04

2,164 6,639 1,610 7,071

1,413 2,817 2,530 2,408

1,103 1,117 938 660

2,665 4,754 4,157 3,916

4,418 11,086 5,654 10,818

-11,663 4,179 -8,530 8,602

1994

900 1,101 1,395 4,143

1,413 2,817

1,103 1,117

3,281 4,599 155

1,610

518 6,109 444

4 ,073 5,520 1,480 4,085 -322 1 ,547 4.428 -72 6.239 4 ,652

40 -5,332 5,441 4,070 -5,023 2,793 -6,301 819 4,718 3,066

-712 -55

-14,471 -686

March April May June July August September October November December

1995 January February Weekly December 21 28 January 4 11 18 25 February 1 8 15 22 March 1 8 15

147 209 155

... --

--151 450 125

--2,530 ----- 200 2,208

---938 --660

618 896 -----840 --... 1,252

--440 ----302 ----979 --- -302 4,459 -529 200 4,245 -621

444

3,624 1,419 3,084 -6,919 3,849 -10,071 -2,855 -4,452 5,932 -1,122 -620 -2,663 10,858 -5,732

-621

22 Memo: LEVEL (bil. $) 6 March 22

185.4

214.8

1. Change from end-of-period to end-of-period. 2. Outright transactions in market and with foreign accounts. 3. Outright transactions in market and with foreign accounts, and short-term notes acquired in exchange for maturing bills. Excludes maturity shifts and rollovers of maturing issues.

27.0

35.5

364.0

375.4

364.0

4. Reflects net change in redemptions (-) of Treasury and agency securities. 5. Includes change in RPs (+), matched sale-purchase transactions (-), and matched purchase sale transactions (+). 6. The levels of agency issues were as follows: I .,. wtlnin March 22

1 year S1.6

1-5

1.4

5-10 0.5

over 10 0.0

-14.1

total 3.5

Cite this document

APA

Federal Reserve (1995, March 27). Bluebook. Bluebooks, Federal Reserve. https://whenthefedspeaks.com/doc/bluebook_19950328

BibTeX

@misc{wtfs_bluebook_19950328,
  author = {Federal Reserve},
  title = {Bluebook},
  year = {1995},
  month = {Mar},
  howpublished = {Bluebooks, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/bluebook_19950328},
  note = {Retrieved via When the Fed Speaks corpus}
}