bluebooks · May 22, 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

May 19,

1995

MONETARY POLICY ALTERNATIVES Recent Developments 1 (1) At the time of the FOMC's March meeting, market participants apparently anticipated that the stance of monetary policy would remain unchanged for a time but that the next policy move would be to tighten.

The Committee's decision at that meeting to leave the

intended federal funds rate at 6 percent thus had little immediate impact on financial markets.

However, data becoming available since

the meeting have portrayed a considerably slower economic expansion than had been thought, and market interest rates have fallen on balance.

Although the expectation that the federal funds rate would

stay at 6 percent over the near term was little affected by this news, the market's assessment of the probable direction of the next policy move has shifted toward ease.

This can be seen, for example, in rates

on federal funds futures contracts five months ahead, which shifted down almost 40 basis points to just under 6 percent--a level that probably includes some liquidity premium (chart).

In association with

this revision, most money-market rates edged down over the period; federal funds continued to trade at rates averaging close to 6 percent. (2) Longer-term rates have dropped more than 1/2 percentage point since the March meeting, with the largest declines at intermediate maturities.

Supplementing weaker economic data, signs that

1. Financial market quotations in this bluebook are taken as of noon, Friday, May 19. 2. The borrowing allowance was raised in three steps during the period, from $75 million to $175 million, to account for seasonal increases. As in the previous intermeeting period, excess reserves ran below levels suggested by historical patterns, a tendency that was taken into account in reserve management decisions.

Chart 1 Federal Funds Futures Rates

Percent

Treasury Yield Curve

Percent

3/28/95

1/9/95

I.....

5/1 8/95

3 2 Months Ahead

Change Since 03/28/95

F-=-

I, 5/18/95

Basis points

-I

1 3

--- I

20 1(0 Maturity in Years

Change Since 03/28/95

Basis points

___ _ -

[IEEE

3 2 Months Ahead

Cur.

.25

10 5 7 3 Mal urity in Years

Note. Changes are taken from levels the day of the previous FOMC meeting.

Implied Treasury Bond Volatility

Percent

Exchange Rates

Mar, 28 1

Yen*

J J ASON 1994 *Index, Jan 1994=100 Weekly. Daily after Mar. 28. J FMAM

1994 Weekly. Daily after Mar. 28.

1995

Index

D J

FMAM 1995

Congress was more serious about taking difficult steps to make major reductions in budget deficits seemed to contribute to the drop in yields.

Among other effects, Congressional actions may have encour-

aged purchases of dollar assets as suggested by the simultaneous rise in the foreign exchange value of the dollar late in the intermeeting period.

Intermediate-term rates now have fallen about 1-1/2 percent-

age points and long-term rates 1-1/4 percentage points from their peaks in late 1994 and early 1995 previous rise.

(chart), reversing about half their

The rally in securities markets was set back only

temporarily by the release of somewhat disappointing inflation numbers for April.

Available information from surveys of price expectations

along with relatively flat commodity prices suggest little change or perhaps even a small improvement in the underlying inflation outlook in recent months.

Thus, the bulk of recent substantial declines in

yields since their peaks likely represents a drop in real rates. Rising odds on sustained growth and low inflation, coupled with recent positive corporate earnings surprises, have kept quality spreads on private debt instruments narrow and have boosted broad indexes of share prices to new records. (3) The dollar's weighted average exchange value rose 1-1/4 percent, on balance, over the intermeeting period.

The dollar

appreciated about 3-1/2 percent, net, against the mark, while depreciating by lesser amounts against the yen and the Canadian dollar.

The

dollar had continued to drop over the first half of the period, however, prompting U.S. intervention purchases of dollars against marks and yen on two days in early April.

The dollar moved sharply

3. U.S. purchases of $1.6 billion against marks and $1 billion against yen were equally divided between System and Treasury accounts.

-3-

higher in early May.

Just as the dollar's weakness in April was not

obviously related to fundamentals, neither was the rebound in early May; as noted above, though, markets did seem to be buoyed by the budget actions taken in Congress.

Foreign long-term interest rates

declined about as much on average as U.S. rates over the period, in part benefiting from some reduction in political uncertainties in France, Italy, and Canada.

Foreign three-month rates declined more

sharply than those in the United States, about 70 basis points on average;

the Bundesbank and the Bank of Japan eased official rates to

offset the tightening effects of earlier appreciations in their currencies.

The financial situation in Mexico appears to have

stabilized a bit:

The peso appreciated through April before levelling

out; over the period, interest rates have declined substantially and stock prices have risen. (4) M2 growth picked up in April to a 4 percent rate, close to expectations at the time of the last FOMC meeting.

M2 was boosted

last month by the need to fund unusually heavy payments of non-withheld taxes resulting from last year's stronger economy and new tax regulations allowing individuals to delay a larger share of federal tax payments until April.

In addition, processing delays earlier this

tax season caused refunds to run at a stronger-than-average rate in April. 5

Moreover, after a year of increases, M2 opportunity costs

have edged down since January; ebbing household demands for securities

4. The Bank of Mexico rolled over its entire outstanding swap drawing of $1 billion on the System on May 3 for an additional threemonth period. 5. M1 also strengthened in April, but to only a 2 percent annual rate. Currency growth slowed a little but remained very strong, while demand deposits contracted sharply. By contrast, other checkable deposits edged up, posting the first monthly increase in nine months.

that compete with M2 are suggested by a substantial weakening in noncompetitive tenders at Treasury auctions in recent months.

M2 in

April was in the lower half of its 1-to-5 percent growth range. (5) M3 grew more rapidly in April than anticipated at the time of the last FOMC meeting, expanding at around a 6 percent pace for the second consecutive month.

The strong performance of M3 again

reflected the needs of commercial banks to fund heavy credit demands. Also contributing to the strength in M3 was a rapid expansion of institution-only money funds, whose rates lagged the decline in market rates.

M3 rose further above its 0 to 4 percent growth range in

April. (6) The limited evidence available suggests that relatively strong borrowing by households and businesses has continued in recent months.

Credit demands in the business sector have been focused main-

ly at the short end.

Large accumulations of inventories have boosted

business loans at banks, while commercial paper expansion, importantly to help fund mergers and acquisitions, also has been brisk.

Banks

report that they have continued to ease terms and conditions for loans and back-up lines of credit over recent months.

Although the rally in

securities markets has sparked some increased bond offerings in recent weeks, funds raised in longer-term debt markets by nonfinancial firms have been limited overall.

Consumer credit growth, though still quite

brisk, has edged lower, held down by reduced automobile financing, but there are early signs that mortgage borrowing has begun to respond to declines in rates.

State and local bond issuance has picked up a bit

of late but remains well below the pace of retirements associated with

6. Strong inflows into stock funds as well as a slight expansion of bond funds, reflecting in part capital gains on these instruments, kept M2+ advancing above an 8 percent rate over March and April, following an extended period of lackluster growth.

-5-

advanced refundings.

The growth of federal sector debt has slowed

most recently as a consequence of strong tax inflows and is running below the pace of 1994.

Total nonfinancial debt has expanded at about

a 5-1/2 percent pace through March, a bit above the midpoint of its monitoring range.

MONEY, CREDIT, AND RESERVE AGGREGATES (Seasonally adjusted annual rates of growth) 94:Q4 to Apr.

Feb.

Mar.

-1.8

0.8

1.9

-1.4

2.6

4.1

2.1

2.2

5.8

6.2

4.8

Domestic nonfinancial debt

6.9

5.3

5.6

10.7

7.3

6.1

5.5

4.6

5.4

4.7

8.2

14.0

9.0

Nonborrowed reserves 3

-2.7

-7.7

-13.1

-5.2

Total reserves

-4.2

-7.5

-12.2

-5.9

3.6

8.6

7.8

6.8

111

946

794

752

Apr.

Money and credit aggregates

Federal Nonfederal

Bank credit Reserve measures

Monetary base Memo:

(Millions of dollars) Adjustment plus seasonal borrowing Excess reserves

1. 2.

94:Q4 to March 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. Includes "other extended credit" from the Federal Reserve.

Monetary Policy Alternatives (7) Three monetary policy alternatives are presented below for consideration by the Committee.

Under alternative B, federal

funds would continue to trade around 6 percent.

Under alternative C,

the federal funds rate would be boosted 1/2 percentage point, to 6-1/2 percent.

Alternative A would reduce the intended trading level of the

funds rate to 5-1/2 percent. 7 (8)

Incoming data show both rising inflation and a weakening

of economic activity over recent months.

Looking forward, a key issue

for monetary policy is whether either of these developments will persist.

In the staff forecast, with short-term interest rates main-

tained at current levels, neither of these risks materializes.

effect, interest and exchange rates close to their prevailing configuration are seen as consistent with the economy producing just above its long-run capacity.

A near-term inventory correction limits

the expansion of production in the second and third quarters, taking pressure off resources.

The unemployment rate ends up close to the

natural rate, growth is at its potential, and the core rate of consumer price inflation runs at just over 3 percent in 1996.

If the

Committee sees the staff forecast as the likely and desired outcome and the risks around it to be reasonably well-balanced, then selection of unchanged reserve market conditions, as under alternative B, would be favored.

7. To accommodate rising demands for seasonal credit, the allowance for adjustment and seasonal borrowings would be raised initially to $225 million under alternative B. Further increases would likely be necessary during the intermeeting period under all of the alternatives. Alternative C could be accomplished through an increase in the borrowing allowance to $275 million, while alternative A could be implemented by leaving the allowance for borrowing unchanged at $175 million in the face of seasonally elevated demand.

(9) Market participants generally anticipate no change in the stance of monetary policy at this meeting.

Thus, market rates

would not be expected to react to selection of alternative B by the Committee.

However, the recent shifts in the yield curve seem to

embody expectations of continued underlying softness in aggregate demand sufficient to induce the Federal Reserve to ease policy later in the year.

Under the staff forecast, incoming information on spend-

ing would suggest a bit more vigor in the economy than would be consistent with the market's outlook, and interest rates may tend to edge higher on balance over the intermeeting period. could remain volatile.

Market conditions

Expectations about the economic and policy

outlook may be especially prone to revision, given the size and recency of the shift in sentiment.

In addition, financial asset

prices may be sensitive to progress through the Congress of the various fiscal policy initiatives currently under discussion. (10)

The fifty-basis-point firming of alternative C might be

favored by the Committee if it wished to provide more assurance that pressures on resources would soon diminish, so as not to perpetuate the recently elevated rate of inflation and, over time, to return the economy toward a disinflationary path.

The depreciation of the dol-

lar, the rise in bond and equity prices, and the continued relaxation of terms and conditions on bank loans this year have in effect eased financial conditions substantially.

Markets seem to have reacted

strongly to what could prove to be only a moderate downshift in underlying demand conditions, and current financial conditions may therefore provide excessive stimulus to an economy already operating around its potential.

(11)

With markets apparently having concluded that rates are

unlikely to rise significantly further, the response in the financial markets to the 50 basis point increase of alternative C could be substantial.

Short-term rates, including the prime rate, would likely

rise by the full amount of the increase in the federal funds rate, and intermediate-term rates would climb considerably as well.

The boost

to nominal yields on long-term Treasuries would be limited by any reductions in premiums for expected inflation, but yield spreads on private paper--including bank funding instruments--could widen if market participants saw a significantly greater risk of a downturn in business activity or if higher interest rates were seen as impairing profit margins.

Bond market volatility could be appreciable as market

participants attempted to sort out the implications of unanticipated tightening for inflation, the strength of the expansion, and credit risks.

The dollar probably would strengthen noticeably, extending the

firming evident over the past week or so. (12)

The Committee might consider the easing of monetary

policy under alternative A appropriate if it saw substantial risks that the recent sluggish growth of final demand and the associated inventory correction could develop into a prolonged period of growth below potential.

In this view, the declines this year in the dollar

and market interest rates might not be adequate in themselves to sustain the expansion, given underlying trends in aggregate demand.

Real

rates could be seen as still too high; for example, the 6 percent funds rate implies short-term real rates above longer-term averages, assuming inflation settles down at 3 percent as in the staff forecast. Committee members might have particular concerns about the level of real rates if they perceived strong odds of a significantly tighter

-10-

stance of fiscal policy than is incorporated in the staff forecast. Such a policy shift would lower "equilibrium" real interest rates by directly reducing government spending and, perhaps, by increasing private saving propensities.

Markets do not currently appear to have

built in a trajectory to a balanced budget and would probably respond to credible measures to reach this target by bidding down longer-term yields.

These declines would, by themselves, help to bolster activity

in the near term.

To cushion the fiscal restraint adequately, how-

ever, declines in long-term rates might need to be reinforced through an easing in monetary policy. (13)

Short-term market rates under alternative A would like-

ly drop close to one-half percentage point.

Long-term markets could

rally further and lower rates would persist, at least until economic data pointed to a vigorous bounceback in economic activity.

The

foreign exchange value of the dollar would decline. (14)

Growth of the monetary and credit aggregates under the

unchanged reserve market conditions of alternative B is presented in the table below.

(Additional data, including monetary projections

under alternatives A and C, are shown on the table and charts on the following pages.) (15)

Credit flows to private sectors are expected to moder-

ate a little in coming months in the staff projection, and be more concentrated in long-term markets and less at depository institutions. With the financial position of most intermediaries solid, borrowers showing few signs of being overextended, and macroeconomic conditions still favorable, lenders should remain quite willing to extend credit, although further easing of terms and conditions is less likely as the economy settles into a pattern of sustainable growth.

Credit demands

-11-

Alt. B Growth from April

to September M2 M3

M1 Domestic nonfinancial sector debt

2-1/2 3-3/4

-3/4 4-3/4

Growth from 94:Q4 to September M2 M3 M1 Domestic nonfinancial sector debt

2-1/4 4-1/4 -1/4 5

from the household sector should slow a little in association with the diminished growth of spending on durables and housing.

In the busi-

ness sector, the financing gap, while remaining wide, may narrow slightly as inventory investment drops and growth of fixed investment expenditures is trimmed, but merger activity will contribute to a still-brisk (though diminishing) pace of borrowing.

Lower market

interest rates and continued narrow quality spreads should encourage a rebound in issuance of longer-term instruments, especially corporate bonds, implying somewhat reduced reliance on bank loans and commercial paper.

Debt of state and local governments should continue to con-

tract, as bonds that had previously been refunded mature.

In the

federal sector, strong tax receipts are leading to relatively light borrowing in the second and third quarters.

From the fourth quarter

of 1994 through September, the growth of domestic nonfinancial sector debt is projected to edge down to about 5 percent under all of the alternatives, leaving this aggregate in the middle of its 3-to-7 percent monitoring range.

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

Alt. B

Alt. C

Alt. A

Alt. B

Alt. C

Alt. A

Alt. B

Alt. C

3630.1 3642.6 3648.6 3656.8 3667.4 3678.2 3688.5

3630.1 3642.6 3648.6 3655.6 3663.8 3672.1 3680.3

3630.1 3642.6 3648.6 3654.4 3660.2 3666.0 3672.1

4356.2 4378.6 4391.7 4406.3 4421.8 4437.3 4452.6

4356.2 4378.6 4391.7 4405.6 4419.6 4433.6 4447.6

4356.2 4378.6 4391.7 4404.9 4417.4 4429.9 4442.6

1147.9 1149.7 1142.5 1143.9 1145.6 1147.5 1150.0

1147.9 1149.7 1142.5 1143.3 1144.0 1144.8 1145.8

1147.9 1149.7 1142.5 1142.7 1142.4 1142.1 1141.6

Mar-95

2.6

5.8

0.8

Apr-95 May-95 Jun-95 Jul-95 Aug-95 Sep-95

4.1 2.0 2.7 3.5 3.5 3.4

4.1 2.0 2.3 2.7 2.7 2.7

4.1 2.0 1.9 1.9 1.9 2.0

6.2 3.6 4.0 4.2 4.2 4.1

6.2 3.6 3.8 3.8 3.8 3.8

6.2 3.6 3.6 3.4 3.4 3.5

1.9 -7.5 1.5 1.8 2.1 2.5

1.9 -7.5 0.9 0.7 0.9 1.0

1.9 -7.5 0.3 -0.4 -0.3 -0.5

-0.4 1.7

1.7 4.3

-1.2 0.0

95 Q2

2.5

2.4

4.8

-0.9

-1.0

95 Q3

3.1

2.5

1.9

4.1

3.8

3.5

0.8

-0.1

-1.0

Monthly Growth Rates

Quarterly Averages 94 Q4 95 Q1

Growth Rate From

Dec-94

Apr-95

2.3

5.2

0.5

Apr-95 Dec-94

Sep-95 Sep-95

3.0 2.7

2.5 2.4

1.9 2.1

4.1 4.6

3.8 4.4

3.5 4.3

0.1 0.3

-0.8 -0.2

-1.7 -0.7

94 Q4 94 Q4 94 Q4

Apr-95 Jun-95 Sep-95

2.1 2.2 2.6

2.1 2.1 2.3

2.1 2.0 2.0

4.8 4.5 4.4

4.8 4.5 4.3

4.8 4.4 4.2

0.4 -0.6 0.2

0.4 -0.7 -0.2

0.4 -0.8 -0.6

93 Q4

94 Q4

1.0

1.4

2.3

94 Q4

95 Q2

2.1

4.6

-0.4

-0.5

94 Q4

95 Q3

2.5

2.2

2.0

4.5

4.3

4.2

-0.0

-0.3

-0.7

1994 Target Ranges:

1.0 to 5.0

0.0 to 4.0

Chart 2

ACTUAL AND TARGETED M2 Billions of Dollars

3900

Actual Level Short-Run Alternatives S-

3850

3800

3750

3700 SA *

3650

3600

3550

.. "

I Oct

Dec 1994

Feb

I Apr

I Jun 1995

I Aug

I Oct

3500 Dec

Feb

Chart 3

ACTUAL AND TARGETED M3 Billions of Dollars

4550

Actual Level Short-Run Altematives

-1

4500

-- 4450

' ~~~..

4400

4350

-1 4300

4250

--1 4200

I I I I I I II Dec 1994

Aug 1995

I I I I I 1 Dec

4150

Chart 4

M1 Billions of Dollars i1400

S *

Actual Level Short-Run Alteratives

~~...

1350

1300

-1

1250

1200

1150

1100

~~~'

* A ................ ............................ .*..

15% --

I I I I I I I IL Dec 1994

Feb

I I I I I I I Aug

1995

Dec

1050

Chart 5

DEBT SDollars

- 14200

Actual Level Projected Level

14000

13800

13600

13400

13200

13000

12800

12600

Dec 1994

Feb

Apr

Jun 1995

Aug

Oct

Dec

-13-

(16)

M3 is projected to decelerate appreciably to a 3-3/4

percent pace over the April-September period.

With business and

household credit growth running a bit slower than over the first few months of the year and shifting toward longer-term markets, the growth 8 of bank loans should fall off some. Reduced funding needs will likely prompt a slackened pace of issuance of managed liabilities, including large time deposits, repurchase agreements, and borrowings from foreign offices.

Nonetheless, M3 is projected to remain above

the upper end of its current 0-to-4 percent annual range through September under alternative B, and even the tighter reserve market conditions of alternative C would not likely be adequate to bring M3 within its range by September. (17)

M2 growth, by contrast, is projected to edge up slight-

ly from that of the previous four months, to a 2-1/2 percent pace over April through September; this aggregate would remain in the lower half of its l-to-5 percent annual range under alternative B.

Although

slower growth of nominal income over the second and third quarters will damp the demand for money, opportunity costs of holding M2 assets have leveled off and begun to fall; as the depressing effects of earlier increases in opportunity costs diminish, M2 should grow more closely in line with income.

M2 velocity is projected to continue

8. The effect of the reduction in loan growth on bank credit is expected to be buffered by slower runoffs of securities from bank portfolios. 9. Despite reduced opportunity costs, M1 is projected to contract at a 3/4 percent annual rate over the April-to-September period, reflecting a reversal of the tax-related buildup in April and the implementation of a new sweep program in early May. (The sweeps are estimated to be lowering M1 growth by a little over 3 percentage points in May; because funds are swept into MMDAs, M2 is not affected.) The M1 projection assumes that no further sweep programs will be instituted. With required reserves contracting in association with the decline in M1 deposits, total reserves are (Footnote continues on next page)

-14-

to rise over the second and third quarters, but at only a 1-1/2 percent average annual rate--far more slowly than the 5 percent increase over the previous four quarters.

The projected growth rate of M2

averages just a bit below predictions of the standard staff model over the second and third quarters--consistent with the recent small prediction errors of the model and the staff's judgment that deposit rates will run below what historical patterns would suggest.

Flows

into stock and bond mutual funds are expected to continue at around the modest pace experienced over the first four months of the year, and M2+ is forecast to expand at about a 4 percent rate over the April-September period, bringing its growth from the fourth quarter of 1994 to 3-1/2 percent.

(Footnote continued from previous page) projected to fall somewhat over the April-to-September period; the monetary base is nevertheless expected to expand at about a 7-1/4 percent annual rate, supported by continued strong net shipments of currency abroad.

-15Directive Language (18)

Presented below is draft wording for the operational

paragraph that

includes the usual options for Committee consideration.

OPERATIONAL PARAGRAPH In the implementation of policy for the immediate future, the Committee seeks to DECREASE SOMEWHAT/maintain/INCREASE SOMEWHAT reserve positions.

the existing degree of pressure on

In the context of the Committee's

long-run objectives for price stability and sustainable economic growth, and giving careful consideration to economic, financial, and monetary developments, somewhat (SLIGHTLY) greater reserve restraint would

(MIGHT) or

(SOMEWHAT) slightly lesser reserve restraint

(WOULD)

might be acceptable in the intermeeting period.

The

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

over coming

May 19, 1995

SELECTED INTEREST RATES (percent) Short-Term

Long-Term

federal

Treasury bills

CDs secondary

comm.

money market

funds

secondary market

market

paper

mutual

prime

bank

U.S. government constant

corporate conventional home mortgages A-utility municipal secondary primary

maturity yields

recently

Bond

market

3-month

6-month

1-year

3-month

1-month

fund

loan

3-year

10-yea

offered

Buyer

fixed-rate

94 -- High - Low

5.85 2.97

5.70 2.94

6.26 3.12

6.73 3.35

6.31 3.11

3.11

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 Monthly May 94 Jun 94 Jul 94 Aug 94 Sep 94 Oct 94 Nov 94 Dec 94

6.20 5.40

5.81 5.57

6.31 5.63

6.75 5.64

6.39 6.02

6.10 5.73

9.00 8.50

7.80 6.26

7.85 6.61

7.89 6.93

8.81 7.95

6.94 6.15

9.57 8.32

9.22 7.83

6.87 6.10

4.01 4.25 4.26 4.47 4.73 4.76 5.29 5.45

4.14 4.14 4.33 4.48 4.62 4.95 5.29 5.60

4.60 4.55 4.75 4.88 5.04 5.39 5.72 6.21

5.03 4.98 5.17 5.25 5.43 5.75 6.13 6.67

4.51 4.52 4.73 4.81 5.03 5.51 5.79 6.29

4.28 4.36 4.49 4.65 4.90 5.02 5.40 6.08

6.99 7.25 7.25 7.51 7.75 7.75 8.15 8.50

6.34 6.27 6.48 6.50 6.69 7.04 7.44 7.71

7.18 7.10 7.30 7.24 7.46 7.74 7.96 7.81

7.41 7.40 7.58 7.49 7.71 7.94 8.08 7.87

8.37 8.30 8.45 8.36 8.62 8.80 8.95 8.78

6.46 6.38 6.48 6.44 6.55 6.83 7.27 7.07

8.78 8.62 8.82 8.82 8.93 9.25 9.43 9.51

8.60 8.40 8.61 8.51 8.64 8.93 9.17 9.20

5.46 5.45 5.52 5.53 5.54 5.79 6.10 6.66

Jan Feb Mar Apr Weekly Feb Feb Feb Feb

95 95 95 95

5.53 5.92 5.98 6.05

5.71 5.77 5.73 5.65

6.21 6.03 5.89 5.77

6.59 6.28 6.03 5.88

6.24 6.16 6.15 6.11

5.86 6.05 6.07 6.06

8.50 9.00 9.00 9.00

7.66 7.25 6.89 6.68

7.78 7.47 7.20 7.06

7.85 7.61 7.45 7.36

8.75 8.55 8.40 8.31

6.84 6.45 6.32 6.22

9.41 9.13 8.90 8.71

9.15 8.83 8.46 8.32

6.82 6.68 6.45 6.35

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

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 Mar

1 8 15 22 29

95 95 95 95 95

5.88 5.93 5.94 5.97 6.06

5.74 5.75 5.75 5.74 5.68

5.91 5.96 5.91 5.88 5.81

6.07 6.15 6.04 5.98 5.94

6.11 6.18 6.17 6.13 6.13

6.03 6.07 6.08 6.05 6.06

9.00 9.00 9.00 9.00 9.00

6.95 7.06 6.88 6.82 6.80

7.27 7.37 7.18 7.13 7.13

7.50 7.57 7.43 7.40 7.40

8.52 8.43 8.32 8.35 8.40

6.31 6.40 6.25 6.34 6.29

9.04 8.91 8.81 8.77 8.96

8.53 8.62 8.38 8.40 8.38

6.51 6.50 6.44 6.41 6.37

Apr Apr Apr Apr

5 12 19 26

95 95 95 95

6.20 5.98 6.07 5.99

5.71 5.66 5.61 5.64

5.84 5.80 5.71 5.73

6.03 5.93 5.82 5.80

6.16 6.12 6.10 6.09

6.10 6.07 6.06 6.04

9.00 9.00 9.00 9.00

6.86 6.76 6.61 6.58

7.15 7.09 7.04 7.01

7.40 7.37 7.38 7.33

8.34 8.29 8.29 8.29

6.22 6.19 6.17 6.29

8.79 8.72 8.62 8.70

8.41 8.37 8.24 8.26

6.41 6.38 6.32 6.30

May May May

3 95 10 95 17 95

6.05 6.00 6.02

5.69 5.60 5.68

5.78 5.63 5.67

5.89 5.65 5.64

6.09 6.02 6.03

6.07 6.03 6.05

9.00 9.00 9.00

6.67 6.29 6.26

7.04 6.70 6.61

7.32 7.02 6.93

7.97 7.95

6.30 6.18 6.15

8.36 8.45 8.32

8.27 7.87 7.83

6.26 6.12 6.10

Daily May May May

12 95 17 95 18 95

5.99 5.97 5.98

5.69 5.68 5.69

5.70 5.65 5.68

5.68 5.61 5.66

6.05 6.02 6.04

6.05 6.05 6.05

9.00 9.00 9.00

6.31 6.21 6.28

6.67 6.53 6.61

7.00 6.86 6.91

6.11

I 30-year

market fixed-rate I

ARM

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

Strictly Confidential (FR)-

Class II FOMC

Money and Credit Aggregate Measures

MAY 22,1995

Seasonallyadjusted Bank credit

Money stock measures and liquid assets nontransactlons components

Period

In M2

In M3 only

total loans and

Domi stic nonfinancial debt'

Investments'

U. S. government'

other'

total'

Annual arowth ratesa( t Annually (Q4 to Q4)

1992

14.3

2.0

-2.3

-6.3

0.5

1.5

3.7

10.7

2.8

4.7

1993 1994

10.5 2.3

1.7 1.0

-1.9 0.4

-2.5 3.6

1.0 1.4

1.4 2.4

5.0 6.7

8.5 5.7

4.1 5.0

5.2 5.2

2.6

1.7

1.3

-1.2

1.3

1.6

6.5

5.4

4.5

4.8

2.4 -1.2 0.0

0.9 -0.4 1.7

0.2 0.1 2.4

8.5 13.2 18.2

2.1 1.7 4.3

1.9 3.6 9.0

7.2 4.0 7.8

3.9 5.9 5.2

4.9 5.3 5.6

4.7 5.5 5.5

1994-APR.

1.8

2.6

3.1

4.3

2.9

3.6

10.3

3.9

4.9

4.6

MAY

0,7

1.0

1.1

-4.6

0.2

1.7

2.2

4.2

4.4

4.3

JUNE JULY AUG. SEP.

3.7 5.4 -1.5 0.2

-1.1 3.7 -0.7 -0.3

-3.3 2.8 -0.3 -0.5

15.5 11.4 1.6 12.0

1.4 4.8 -0.3 1.6

-0.8 5.4 -0.1 0.9

4.3 13.0 4.9 4.6

4.9 1.1 6.1 6.0

4.7 4.8 5.2 5.7

4.7 3.8 5.4 5.8

OCT.

-3.0

-1.4

-0.7

19.5

1.8

4.5

2.9

5.4

5.3

NOV. DEC.

-0.6 0.3

0.4 1.6

0.9 2.1

9.2 14.8

1.8 3.6

3.1 11.2

3.0 6.7

8.5 1.1

4.9 5.4

5.9 4.3

1995-JAN. FPB.

1.0 -1.8

3.8 -1.4

5.2 -1.2

19.8 20.4

6.4 2.2

7.4 10.9

11.9 4.7

2.5 10.6

6.3 5.5

5.3 6.9

0.8 1.9

2.6 4.1

3.4 5.1

22.4 16.4

5.8 6.2

11.3

8.2 14.0

7.4

4.6

5.3

Levels tSbillions) Monthly 1994-DEC.

1147.8

3615.0

2467.1

689.5

4304.4

5293.9

3316.1

3497.4

9467.6

12965.0

1995-JAN. FEB. MAR.

1148.8 1147.1 1147.9

3626.5 3622.3 3630.1

2477.7 2475.2 2482.3

700.9 712.8 726.1

4327.4 4335.2 4356.2

5326.6 5375.1 5425.5

3349.1 3362.2 3385.1

3504.7 3535.8 3557.5

9517.2 9561.0 9597.4

13021.9 13096.8 13154.9

1149.7

3642.6

2492.9

736.0

4378.6

1144.7 1150.2 1150.0 1149.7

3633.2 3640.5 3635.7 3646.9

2488.4 2490.3 2485.7 2497.2

722.5 727.4 741.6 740.0

4355.7 4367.9 4377.3 4386.9

1 p

1149.4

3650.9

2501.5

741.5

4392.4

8 p

1142.9

3648.4

2505.5

745.9

4394.3

Quarterly(average) 1994-02 1994-03 1994-Q4 1995-01

Monthly

MAR. APR. p

APR. p Weekly 1995-APR.

MAY

3 10 17 24

3424.5

1. 2.

Adjusted 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.

preliminary

preliminary estimate

Strictly Confidential (FR). Class II FOMC

Components of Money Stock and Related Measures

MAY 22, 1995

Seasonally adjusted unless otherwise noted

Period

Currency

D deposits

Other checkable deposits

Overnight RPs and Eurodollars

deposits,

dpot_

_NSA__

1 Leve.ls

Small denomlnation time

Money market mutual funds general purpose Institutions and o debroker dealer' 7

Large denomination time

Term RP's NSA

NSAc

deposits$ 9

Terhortterm ErS avs dolla bonds

Annual (Q4) 1992 1993 1994

290.1 319.8 352.5

336.5 381.2 382.9

380.0 412.6

Monthly 1994-APR. MAY JUNE

334.5 337.3 340.0

388.1 385.6 386.3

412.0

JULY AUG.

342.8 345.1 347.2

388.0 386.6

SEP.

OCT. NOV. DEC.

350.0 353.0 354.5

1995-JAN. FEB. MAR.

is3

ceS 14

81.8 96.9 103.3

46.7

46.5 54.0

154.5 170.8 179.9

331.0 330.2 360.8

365.5 383.8 411.6

20.6

180.7

358.4 334.2 357.8

370.5 373.5 370.7

183.1 177.5 177.9

329.8 332.4 335.0

98.9 98.0 102.5

46.5 47.7

174.8 175.7 176.7

354.6 357.1 348.4

387.1 392.6 392.7

14.0

50.3

776.0 782.2 789.0

376.1 377.0 377.4

178.7 177.4 176.3

338.2 341.5 347.3

103.0 101.2 101.9

51.0 51.2 52.1

177.7 178.5 179.1

353.2 357.7 350.7

392.8 391.7

10.9 11.4 11.9

1171.0 1157.8 1144.2

799.0 809.8 819.7

379.5 383.3 389.0

180.8 180.5 180.8

353.0 357.7 362.7

101.9 102.9 105.2

53.0 53.8

179.5 179.9 180.3

351.1 358.6 372.6

404.2 404.0 426.5

11.8 11.0 10.2

123.2 117.7 117.6

1129.8 1111.9 1094.9

835.0 854.7 877.5

392.2 391.8 391.4

186.3 180.4 189.0

363.0 371.1 377.4

109.1 112.8 112.5

54.9 57.7 58.8

180.5 180.4 180.5

380.3 404.0 424.5

428.6 445.7 453.9

9.8 9.9 10.4

114.9

1082.4

895.9

396.6

192.9

379.9

115.7

60.5

83.0 95.1 114.5

1177.5 1211.7 1157.7

882.2 790.4 809.5

359.2

412.4 412.5

98.9 102.5 106.8

1220.0 1214.8 1206.8

770.1 770.8 772.9

386.5

413.1 410.8 408.9

109.5 110.9 111.8

1201.2 1192.6 1183.7

384.4 382.3 382.0

405.4 403.8 402.9

113.7 113.0 116.7

357.7 358.8 362.5

383.4 384.0 383.2

399.3 395.9 393.3

365.7

381.2

393.6

404.0

357.8 383.9

205.8 196.9

55.3

1. Net of money market mutual fund holdings of these items. 2. Includes money marketdeposit accounts. 3. Includes retail repurchase agreements. All IRA and Keogh accounts at commercial banks and thrift institutions are subtracted from small time deposits. 4. Excludes IRA and Keogh accounts, 5. Net of large denomination time deposits held by money market mutual funds, depository institutions, U.S. government, and foreign banks and official institutions. preliminary

epaper

.bllonas)

APR.

ank

Sreaial

387.7

15.5 11.0

11.6 10.8

NET CHANGES IN SYSTEM HOLDINGS OF SECURITES Millions of dollars, not seasonally adjusted

May 19, 1995 Treasury bills

Period purchases 1992 1993 1994

13,086 17,717 17,484

1994 ---Q1 ---Q2 ---Q3 ---04

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

Redemptions (-)

Net change

i00

11,486

Treasurycoupons Netpurhass purcases 1-5 5-10 over 10

1 year 1,096 1,223 1,238

13,118 10,350 9,168

2,818

2,164

1,413

6,639

2,817

1,103 1,117

1,610 7,071

2,530 2,408

938 660

-----

17,717 17,484

-----

4,168 3,818

STRICTLY CONFIDENTIAL

(FR) CLASS II-FOMC

Redemptions (-)

Federal agencies redemptions

Net Change

Net change outright holdings total 4

(

Net RPs

2,333 3,457 3,606

767 2,337

19,365 18,431 15,493

632 774 1,002

300,219 3! 5,374 311,975

-13,215 5,974 -7,412

618 896 840 1,252

616 440 302 979

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

411 307 114 169

4,418 111,086 5,654 0,818

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

621

-621

229

-850

-10,383

70 58 20 63 31 62 70 37

11,480 1,085 -322 i 1,547 4,428 -72 6,239 1 4,652

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

91 55 83 20

-712 -55 -83 4,136

-14,471 -686 4,774 -2,758

-64

-55

-83

4,526 -370 -20

-30

-10,071 -2,855 -4,452 5,932 -1,122 -620 -2,663 10,858 -5,732 3,566 -1,170 -224 504 6,168 -7,413 112 1,102

1995 --Q1 -..

1994 May June July August September October November December

1,395 4.143

155 302

-302

1,610

2,530 518 6,109 444

938

840 979

200 2,208

1995 January February March April Weekly January 25 February 1 8 15 22 March 1 8 15 22 29 April 5

2,549

660

839

1,252

1,138

4,459 -529 200 4,245

621

-621

370

4,156

-.-

839 ---.

--- ---__ ..---_ .--

2,549 -.-.

--..-

---. -- _

1,138 ---.

-18.

19 26 May 3

--- 4,526 -370

-.-.

17 Memo: LEVEL (bil. $) 6 May 17

86.4 __________________________.5.

28.3

35.0

379.5

368.6

368.

-13.5

1. Change from end-of-period to end-of-period. 4. Reflects net change in redemptions (-) of Tresasury and agency securities. 2. Outright transactions in market and with foreign accounts. 5. Includes change in RPs (+), matched sale-pu rchase transactions (-), and matched purchase sale transactions (+). 3. Outright transactions in market and with foreign accounts, and short-term notes acquired 6. The levels of agency issues were as follows: in exchange for maturing bills. Excludes maturity shifts and rollovers of maturing issues. within over 10 1-5 5-10 1 year 0.0 1.3 0.4 1.6 May 17

total 3.3

Cite this document

APA

Federal Reserve (1995, May 22). Bluebook. Bluebooks, Federal Reserve. https://whenthefedspeaks.com/doc/bluebook_19950523

BibTeX

@misc{wtfs_bluebook_19950523,
  author = {Federal Reserve},
  title = {Bluebook},
  year = {1995},
  month = {May},
  howpublished = {Bluebooks, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/bluebook_19950523},
  note = {Retrieved via When the Fed Speaks corpus}
}