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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 some material may have been redacted from this document if that material was received on a confidential basis. Redacted material is indicated by occasional gaps in the text or by gray boxes around non-text content. All redacted passages are exempt from disclosure under applicable provisions of the Freedom of Information Act. 1 In some cases, original copies needed to be photocopied before being scanned into electronic format. All scanned images were deskewed (to remove the effects of printer- and scanner-introduced tilting) and lightly cleaned (to remove dark spots caused by staple holes, hole punches, and other blemishes caused after initial printing). 2 A two-step process was used. An advanced optical 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. Content last modified 6/05/2009. CONFIDENTIAL (FR) March 28, 1969. MONEY MARKET AND RESERVE RELATIONSHIPS Recent Developments (1) Since the last meeting of the Committee the cumulating impact of monetary restraint has been reflected in further increases in long-term interest rates, another rise in the prime loan rate, and a contraction in major deposit and reserve aggregates. At the same time, there has been little further upward movement in yields on intermediateterm securities, while Treasury bill yields have declined substantially. In the bill market, the combined pressure of seasonal bill demands, supply scarcities, and the absence of an overt monetary policy move that many in the market had expected brought the 3-month bill rate to below 6 per cent following the mid-month corporate tax payment period. Most recently the 3-month bill yield was quoted 5.99 per cent bid, about 16 basis points below its level at the time of the March 4 meeting. (2) In recent weeks, conditions in the Federal funds market have tended to be slightly firmer than in the four weeks preceding the March 4 Committee meeting, with the effective rate averaging around 6-3/4 per cent. In the four weeks ending March 26, net borrowed reserves have been deepening in a $550 - $750 million range, averaging close to $675 million, compared with $600 million for the previous four weeks. Member bank borrowings have fluctuated in about a $750 million to $950 million range, averaging almost $840 million, about the same as in February. -2(3) Estimates of the rate of change in the bank credit proxy for March, adjusted to include banks' borrowing of Euro-dollars through their foreign branches, have fluctuated around the lower end of the average annual rate of decline of 3 - 6 per cent projected in the last blue book. The proxy is currently estimated to show a decline of about 6-1/2 per cent annual rate on average for the month. Not only has the proxy declined a little more than projected, but the components of the adjusted proxy have moved rather differently from earlier anticipations. The decline in deposits was greater, partly offset by larger Euro-dollar borrowings. Within the deposit category, time deposits have shown more strength than earlier projected, but contrary to projections, there was no net growth in private demand deposits even though U.S. Government deposits declined substantially, on average. (4) The money supply is now estimated to show only about a 2 per cent annual rate of rise on average from February to March, reflecting growth in currency about in line with other recent months. Business loan expansion in March was considerably weaker than the staff anticipated, and corporations appear to have utilized cash balances more intensively to help finance their tax payments. Private demand deposits were also absorbed by very rapid bank sales of the $1 billion bill strip issued in early March. (5) The average level of outstanding time and savings deposits showed little change from February to March, in contrast to -3sizable contractions in the previous two months. Net inflows of consumer-type time and savings deposits in March were stronger than anticipated. Outstanding negotiable CD's, however, continued to decline roughly in line with projections, with attrition in March estimated at about $1-1/4 billion. The decline in such CD's since early December totals about $5-1/2 billion. (6) The following table summarizes the annual rates of change for the major reserve and deposit aggregates for 1968 and the JanuaryMarch, 1969, period: Jan. Mar. Dec. '67June '68 July '68Dec. '68 3.7 9.0 0.8 -0.1 8.1 0.7 Proxy 3.7 12.8 -5.8 Proxy plus Euro-dollars 4.7 13.0 -2.2 Total loans and investments (as of last Wednesday of month) 6.7 14.9 1.2 Money supply 6.1 6.1 1.9 Time and savings deposits 5.8 17.1 -6.7 Savings accounts at thrift institutions 6.1 6.3 '69'69p Total reserves Nonborrowed reserves Bank credit, as indicated by: NOTE: Dates are inclusive. p--preliminary. 1/ January and February only. 51/ 5.2- Prospective developments (7) The projected relationships among marginal reserve measures, day-to-day money market rates, bill rates, and bank reserve and credit flows for April have to take account of several special factors: potential withdrawals by individuals from time and savings deposits after the end-of-March interest crediting; potential mid-April tax period pressures; and possible downward bill rate movements particularly after the tax period and as further bill redemptions by the Treasury take place. While uncertainties as to possible outcomes are great, there are fairly good odds that, under current monetary policy, bill rates will average lower for April as a whole relative to the Federal funds rate than in recent months, and that bank credit growth might resume, though at a slow pace. (8) Continuation of prevailing conditions in day-to-day money markets would imply a Federal funds rate around the 6-3/4 per cent average of the past few weeks, and new loan rates to dealers at New York banks at 7 per cent or above. Member bank borrowings may be in a $750 million - $1 billion range, and net borrowed reserves in a $550 - $800 million range. Mid-April tax period pressures may entail strong demands for Federal funds as banks attempt to finance necessitous short-term borrowing by business customers; sales finance companies and Government security dealers are also likely to have increased borrowing needs around this time. However, demands on the funds market might be less intense in the latter part of April, and it might prove necessary for -5the System to maintain upward pressure on the Federal funds rate to keep bill rates from dropping so sharply as to change market assessment of the stance of monetary policy. (9) Given the above marginal reserve and day-to-day money rate specifications, the 3-month Treasury bill may fluctuate in a 5.80 6.15 per cent range. Over the near-term, given the recent build-up in dealer positions in short-term bills, upward bill rate pressures may be generated by reversal of quarterly bank statement date and Cook County tax period window dressing and by mid-April tax period financing needs. The upward pressures might not carry rates very far, however, if market participants begin to focus more sharply on prospects for a diminished supply of bills later in April and over the next two months as the budgetary surplus permits repayment of a substantial amount of Treasury debt. In the latter part of April, downward pressures on bill rates could drop the yield on the 3-month bill toward, or below, the bottom of the indicated range, partly as a result of reinvestment demand from maturing April tax bills not used to pay taxes. On April 30 Treasury will probably announce the terms of the mid-May refunding, which might also generate prospects of some additional demands for bills. If the bill rate nears the bottom end of the range, and particularly if it drops below, downward pressures might cumulate as the market comes to expect a less restrictive monetary policy. (10) Assuming that the 3-month bill does not drop below the bottom end of the range--and averages a little below 6 per cent for -6April as a whole--outstanding CD's at banks may be expected to decline by $600 - $800 million. This would be a considerably smaller decline than in previous months, particularly since a reduction of around $300 million would be expected for seasonal reasons. (11) With CD attrition projected to slow, it is likely that total time and savings deposits of banks may show little net change on average in April, as in March, compared with about a 10 per cent annual rate of decline over the first two months of the year. New inflows of consumer-type time and savings deposits in April are expected to be at a slower rate than in recent weeks. Individuals are likely to make larger than seasonal withdrawals following the interest-crediting period to invest in market instruments, and many savers are likely to draw on their balances to finance sizable retroactive tax payments. However, the staff does not expect withdrawals for interest rate reasons at banks (or thrift institutions) to be significantly worse than in January; long-term market rates are higher than around year-end, but Treasury bill rates are lower than around year-end. (12) Private demand deposits at banks in April are expected to show little net change on average, despite a considerable rise in U.S. -7Government deposits in consequence of payment of the recent $1.8 billion bill strip on the last day of March and of heavy tax inflows in April. A rebound in credit demands on banks in April, partly to finance these tax payments, is expected to sustain private demand deposits. (13) Given these deposit flows, the bank credit proxy may increase in a 1 - 4 per cent annual rate range in April. Demands for Euro-dollars are expected to continue strong, though perhaps moderating a shade as domestic deposits become somewhat more readily available than in March. The adjusted bank credit proxy (including Euro-dollars) might therefore rise in a 2 - 6 per cent annual rate range. (14) Over all, long-term interest rates are likely to edge upward, assuming expectations as to peace do not become more favorable or that recent declines in short-term rates do not cumulate. Mortgage borrowing demands are expected to continue relatively strong, and the volume of corporate bond offerings may pick up. And with respect to State and local governments, banks are still likely to be only marginal net buyers at best. Policy alternative (15) The Committee may wish to consider a more restrictive complex of money market targets, particularly if firming action involving other monetary policy instruments is taken. An increase in the discount rate to 6 per cent probably would be taken as a clear signal of a move to reinforce monetary restraint, while a smaller rise would have obvious elements of ambiguity in current market circumstances. A rise to 6 per cent may tend to raise the whole interest rate structure somewhat, although it would appear that prevailing market interest rates have to some extent already discounted some such action. bill rate may move up into a 6-6.30 per cent range. The 3-month If the discount rate were raised shortly after the FOMC meeting, the combination of such an increase, the recent build-up in dealer bill positions, and expected April tax period pressures might press bill rates quickly toward the upper end of the range. But such rate pressures should moderate in the latter part of April, for reasons noted earlier. Discount rate action in the latter part of April could, therefore, serve principally to offset downward yield pressures likely to develop at that time rather than to boost the rate structure to new higher levels. (16) Assuming banks continue relatively reluctant to borrow from the window, a higher discount rate is likely to be associated with some increase in propensities to sell bills, to borrow Euro-dollars, and to borrow in the Federal funds market. Given this behavior pattern, a set of money market targets for open market operations consistent with maintaining the developing taut credit market conditions (as compared with such conditions absent a discount rate increase) would include a Federal funds rate around 7 per cent or slightly above, member bank borrowings centering around $1 billion, and net borrowed reserves in a $650-$900 million range. (17) Under these conditions, and given existing Regulation Q ceilings, total member bank deposits (without adjustment for Euro-dollars) in April might change in a wide -2 to +2 per cent, annual rate, range, with the actual development depending in part on the timing of a discount rate action (and thus how soon time deposit performance is affected) and on whether a discount rate hike were to be combined with other actions. The increased demands for Euro-dollars would be likely to be reflected both in higher interest rates in that market and in somewhat more inflow. An enlarged inflow might keep the rate of change in the adjusted bank credit proxy a little above zero. (18) Consumer-type time deposits might be marginally affected by higher market rates associated with a discount rate hike and tighter open market operations, but more importantly banks' ability to slow their CD attrition is likely to be curtailed. A CD run-off continuing at a rate around $1 billion a month may be expected. (19) Upward interest rate pressures in long-term markets are likely to be extended. Banks may become more convinced that a capital loss year is in prospect, and thus become more active sellers of longerterm securities. And the corporate bond market calendar, which has -10– been relatively moderate in recent months, might expand as corporations move rapidly to establish claims on financial resources; they might also begin taking down commitments from banks in anticipation of reduced credit availability and perhaps another prime loan rate rise. The dura- tion and strength of rises in long-term interest rates will probably depend on how successful the policy moves are in breaking inflationary psychology. (20) The announcement of an increase in reserve requirements-- say a 1/2 point increase on either demand or time deposits--in conjunction with a discount rate rise would likely have, among other things, a more pronounced effect on expectations. Interest rates would probably rise somewhat more, although the odds on the 3-month bill rate moving above the upper end of the range in paragraph (15) are small, given the Federal funds rate specified in paragraph (16). Bill market pressures would be modified by the view that a reserve requirement increase would entail less bill sales (or more bill buying) through the open market account. Moreover, it is likely that marginal portfolio adjustments of banks to a reserve requirement increase will fall on longer-term securities to a considerable extent since bank liquidity is already substantially reduced. The impact of monetary restraint would become more widespread as smaller banks would become less willing holders of State and local and U.S. Government securities, and a larger number of banks are under greater pressure to tighten lending policy. Bank credit may -11- be weaker in April than indicated in paragraph (17), and there may possibly be more of a lingering downward effect on the averages for the succeeding months. Table A-1 MARGINAL RESERVE MEASURES (Dollar amounts in millions, based on period averages of daily figures) _ Period __ _ Excess reserves ] As Member banks borrowines I revised to Free I date Monthly (reserves weeks ending in): 1968--February March April May June _ _ reserves As first published each week As expected at conclusion of each week's open 389 337 348 354 341 331 337 346 267 286 444 368 649 689 728 727 523 577 L92 458 541 744 21 -312 -341 -374 -386 -192 -240 -146 -191 -255 -300 224 238 163 715 836 836 -491 -598 -673 479 52 368 420 531 434 575 859 - 52 -382 -207 -439 -114 -443 -274 -525 -203 -446 -256 -369 1969--Jan. 901 202 232 273 188 1,320 498 687 782 891 -419 -296 -455 -509 -703 -488 -365 -542 -572 -758 -473 -349 -533 -610 -779 Feb. 235 221 363 204 744 799 1,044 757 -509 -578 -681 -553 -568 -631 -721 -592 -615 -716 -726 -641 207 200 56 226 734 872 775 963 -527 -672 -719 -737 -577 -666 -719 -737 -625 -608 -725 -754 July August September October November December 1969--January February p March p Weekly: 1968--Dec. Mar. p - Preliminary market operations TABLE A-2 AGGREGATE RESERVES AND RELATED MEASURES (In per cent, Reserve Total Reserves Retrospective Changes, Seasonally Adjusted annual rates based on monthly averages of daily figures) A gregates Required reserves Against Nonborrowed Total Demand Reserves Deposits a r Monet Bank Deposits Bank De its (credit) / Variab Time Deposits (comm. banks banks) 1 es Money Supply Private Total Demand Deposits Deposits ____ Annually: + 9.9 + 7.2 1967 1968 +11.5 +10.2 + 7.0 + 5.2 + 7.1 + 6.3 +16.6 +12.5 + 2.2 +16.7 + 9.9 -12.6 +11.4 +11.4 +15.3 +19.2 - 9.4 + 2.2 + 6.6 + 0.6 - 6.0 - 1.9 + 0.1 - 8.8 + 4.1 + 9.6 +12.2 +14.5 +23.3 + 7.7 + 0.1 +21.2 +21.8 + + + + - Monthly: 1968--Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. +11.0 1969--Jan. Feb. Mar. r + 9.7 - 0.6 -6.5 + 4.9 + 5.0 +23.5 - 1.6 + 9.8 + 5.5 + 1.3 +12.2 - 2.3 - 1.0 +13.9 - 3.7 7.9 4.8 8.5 8.2 7.3 c +14.5 + 0.2 - 8.9 +11.7 + 8.6 (+11.5) (+ 9.4) +16.1 + 6.6 +10.0 + 4.3 (+ 6.5) (+10.8) (+ 4.7) -11.1 - 4.7 (- + 1.5 + 7.7 + 1.7 + 6.5 + 9.0 +21.4 + 8.4 +12.5 +11.1 +12.7 (+ 5.1) (+ 9.3) (+10.1) (+22.1) (+ 9.4) (+11.8) (+11.3) (+11.6) + + + + + + +10.8 +17.3 -17.5 - 4.9 1.2 9.8 (- 2.0) (+ 2.0) (- 6.7) 3.5 + 4.1 + 6.0 3.8) +11.3 3.9 7.2 9.7 2.6 3.2 3.8 + 6.4 + 6.5 + 6.7 + 6.2 + + + + + + + + 6.6 2.6 4.6 5.9 6.8 1.7 2.5 6.8 +11.7 +12.6 + 8.4 + 7.5 +14.0 +21.4 +17.3 +17.7 +14.4 +14.3 +12.8 + 5.7 +14.9 -10.6 + 3.1 - + 0.6 + 1.9 8.9 0.6 - 5.0 + 4.4 +10.7 + 7.5 + 3.3 - 7.3 + 5.7 +10.6 + 7.3 + 4.0 -1.6 1/ Includes all deposits subject to reserve requirements. Movements in this aggregate correspond closely with movements in total member bank credit.on a daily average basis. Figures in parenthesis include Euro-dollar borrowings. p - Preliminary. r - revised. Chart 1 MEMBER BANK RESERVES MONTHLY AVERAGES OF DAILY FIGURES SI I I- I I BILLIONS OF DOLLARS, SEASONALLY ADJUSTED 28.5 28.0 27.5 27.0 26.5 26.0 25.5 25.0 24.5 24.0 23.5 S 1967 D M J 1968 S D M 1969 Chart 2 MEMBER BANK DEPOSITS AND LIABILITIES TO OVERSEAS BRANCHES BILLIONS OF DOLLARS TOTAL MEMBER BANK DEPOSITS (CREDIT PROXY] SEAS ADJ WEEKLY AVERAGE OF DAILY FIGURES 294 290 286 282 278 - -- 274 270 266 262 258 254 8 LIABILITIES TO OVERSEAS BRANCHES (WEEKLY REPORTING BANKS) NOT SEAS ADJ, WEDNESDAYS 6 4 2 S 1967 D M J 1968 S D M 1969 Chart 3 MONEY SUPPLY AND BANK DEPOSITS SEASONALLY ADJUSTED WEEKLY AVERAGES OF DAILY FIGURES I BILLIONS OF DOLLARS -/ 190 MONEY - BILLIONS OF DOLLARS - SUPPLY 186 182 204 178 200 174 ------ - 170 196 192 ------- 188 TIME DEPOSITS ADJUSTED (All Commercial Banks) 184 ------ - 180 176 172 - 24 24 _ NEGOTIABLE CD'S NOT SEAS ADJ, WEDNESDAYS _ 168 -- 20 16 S J 1967 D M J 1968 S D M 1969 Chart 4 DEMAND DEPOSITS AND CURRENCY SEASONALLY ADJUSTED WEEKLY AVERAGES OF DAILY FIGURES BILLIONS OF DOLLARS 48 MONEY SUPPLY COMPONENTS: 44 CURRENCY OUTSIDE BANKS 40 -_ 36 DEMAND DEPOSITS _ -- 146 142 138 - 134 130 12 U.S. GOVT. DEMAND DEPOSITS (Member SS A Banks) M J S 1967 D J S D M M J S D M 1968 1969 Table B-1 MAJOR SOURCES AND USES OF RESERVES Retrospective and Prospective (Dollar amounts in millions, based on weekly averages of daily figures) Factors affecting supply of reserves Period Federal Reserve credit (excl. Gold l float) I/ Year: 1967 (12/28/66 58 (12/27/67 - Year-to-date: (12/27/67 - 3/27/68) (12/25/68 - 3/26/69) Weekly: 1969--Feb. 5/ +4,718 +3,757 - + - 12/27/67) 12/25/68) 5/ stock -1,950 909 36 725 -2,067 Currency outside banks -2,305 -3,221 +1,122 +1,016 = Change Technical factors net 2/ - 165 +3,039 - in total = Bank use of reserves Required Excess es reserves 3/ reserves +1,522 +1,508 443 reserves +1,517 +1,563 - -1,627 - 361 647 - 80 453 + - 5 55 - 281 194 12 19 26 Mar. 69 242 631 638 122 189 462 195 55 230 164 50 + - 135 177 331 492 + - 182 163 189 333 47 14 142 159 5 12 p 19 p 26 p 120 31 47 70 167 227 424 84 161 64 336 253 - 114 261 40 99 + - 117 254 104 269 3 7 144 170 5 I ________________ PROJECTED4 125 140 260 205 235 1969--Apr. _____________________________ L 35 230 10 100 460 80 95 250 385 400 80 5 20 80 295 + + + + ________UL For retrospective details, see Table B-4. For factors included, see Table B-3. For required reserves by type of deposits, see Table B-2. See reverse side for explanation. Includes increase in reserve requirements of $360 million effective Jan. 18, 1968. p - Preliminary. Jan. 11, 1968 and $190 million effective Table B-2 CHANGES IN REQUIRED RESERVE COMPONENTS Retrospective and Prospective Seasonal and Nonseasonal Changes (Dollar amounts in millions, based on weekly averages of daily figures) iod Period Total rqui required reserves rese s Supporting private deposits Supporting U. S. Gov't. demand demand deposits Total Total Other than seasonal chanes seasonal changes Demand Time Seasonal changes Demand Time >ar: 967 (12/28/66 1968 (12/27/67 - 12/27/67) / +1,517 + 261 +1,256 + 59 + 6 +1,023 + 168 - / +1,563 - 558 +2,121 - 382 + 25 +1,647 + 831 12/25/68) Year-to-date: - 80 453 + 25 131 - 55 584 - 528 514 + + 239 126 + + 264 65 - 30 261 5 12 - 182 163 + + 258 324 - 440 487 - 289 307 + + 19 18 - 128 160 - 42 38 19 26 + - 189 333 + - 73 46 + - 116 287 - 96 252 + + 13 13 + - 233 33 - 34 15 5 12 p 19 p 26 p + - 117 254 104 269 - 58 29 184 143 + - 59 225 288 126 + 240 258 320 48 + + + - 6 6 7 7 + + - 187 35 22 174 + 12 8 17 4 2 9 16 + + - 80 5 20 + + - 40 210 195 + + 40 205 175 + + 65 255 145 10 60 40 15 10 10 + + - + - 20 23 + 80 - 180 + 260 + 195 - 5 + 40 + 30 30 + 295 - 35 + 330 + 330 - 5 + 20 - 15 (12/27/67 - 3/27/68) (12/25/68 - 3/26/69) Weekly: 1969--Feb. Mar. PROJECTED 1969--Apr. 1/ Reflects reserve requirement changes in March 1967 and January 1968. -- p - Preliminary. Table B-3 TECHNICAL FACTORS AFFECTING RESERVES Retrospective and Prospective Changes (Dollar amounts in millions, based on weekly averages of daily figures) Technical factors (net) Period Treasury operations Float Foreign deposits and gold loans ACTUAL - 12/27/67) 12/25/68) F. R. accounts (Sign indicates effect on reserves) Year: 1967 (12/28/66 1968 (12/27/67 Other nonmember deposits and - 165 +3,039 + 85 928 - + - 158 112 - 389 - +1,309 6 - Year-to-date: (12/27/67 (12/25/68 - - 3/27/68) - 3/26/69) Weekly: 1969--Feb. 443 -1,627 5 854 -1,452 - 4 + 5: 223 335 161 112 128 158 134 234 + 150 115 250 115 100 325 400 + 293 115 + 36 97 20 116 Mar. 10 68 21 38 + - - L + - 3 - PROJECTED 1969--Apr. p - Preliminary. 80 95 250 385 400 25 5 135 150 60 Table B-4 SOURCE OF FEDERAL RESERVE CREDIT Retrospective Changes (Dollar amounts in millions of dollars, based on weekly averages of daily figures) t Total Federal Reserve credit (Excl. float) I, Period Year: 1967 (12/28/66 1968 (12/27/67 - 12/27/67) 12/25/68) Year-to-date: (12/27/67 - 3/27/68) (19/25/68 - 3/26/69) U.S. government securities Repurchase Total Bills Other agreements 1holdings Itt Federal Agency Securities +4,433 +2,143 +1,153 +1,176 - 455 519 317 252 - 81 + 106 + 166 54 172 Bankers' acceptances 19 3 - 69 52 7 10 + +5,009 +3,298 + 909 + 691 - 36 - 161 +1,230 + + 742 344 + + 576 398 - 347 480 503 - 175 480 503 77 146 306 + 69 - 577 21 - - 203 + 514 12 11 + + +4,718 +3,757 Member banks borrowings 237 104 Weekly: 1969--Jan. 1 8 15 22 29 Feb. Mar. 5 12 19 26 5 12 p 19 p 26 p - 470 205 389 396 - 69 + + 242 631 + + + - 638 - 292 - - 120 - 63 87 - + + + 31 47 70 + - - 105 109 + - 55 69 69 89 123 109 + 461 - 822 + 189 + 85 8 146 251 308 74 82 11 6 72 146 11 7 109 + 147 55 + 245 - + + - 95 + 287 - 23 + + 138 + - 97 + + 188 - Chart Reference Table C-1 TOTAL, NONBORROWED AND REQUIRED RESERVES Seasonally Adjusted (Dollar amounts in millions, based on monthly averages of daily figures) Period Total S reserves I Nonborrowed reserves Total equredreserve Aainst private deposits Demand __Total 23,293 23,029 23 065 22 954 22 915 22,895 22,552 22,336 22,319 22,243 22,303 22,286 22,864 1967--Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. 23,217 23,471 23 869 23 910 23,952 24,105 24.342 24.627 24,786 25,121 25,275 25,153 22,770 23,107 23,668 23,775 23,874 23,982 24,279 24,586 24,721 25,020 25,142 24,848 22,875 23,134 23,383 23,529 23,531 23,660 23,960 24,234 24,476 24,810 24,947 24,914 1968--Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. 25,500 25 765 25,812 25,193 25,401 25,135 24,938 24,984 25,121 25,425 25,151 25,389 25,402 25,276 25,236 25,438 26,431 26 395 26,610 26.732 26.976 25,918 25,947 26,211 26,160 26,139 26,053 26,158 26,344 26,524 26,686 25,340 25,294 25,528 25,749 26,050 18,025 18,082 18,133 18,387 18,550 18,727 18,765 18,621 18,746 18,883 19,088 r 27,193 27,180 27,032 r 26,441 26,359 26,186 r 27,009 27,013 26,813 25,921 25,911 25,843 19,066 19,150 19,102 1966--July Aug. Sept. Oct. Nov. Dec. 1969--Jan. Feb. p Mar. p 25,623 25.711 25 816 25,923 b p - Preliminary. r - Revised. 22,687 22,712 22,629 22,593 22,600 25,601 22,344 22,320 22,349 22,229 22,198 22,262 16,963 16,908 16,922 16,827 16,810 16,825 22,298 22,559 22,785 22,779 23,071 16,774 16.959 17,101 17,015 17,244 17,472 17,582 17,701 17,704 17,805 17,879 17,860 23,387 23,578 23,776 23,850 23,995 24,122 24,157 24,270 24,333 24,431 24,487 24,751 24,925 25,188 17,974 Table C-2 DEPOSITS SUPPORTED BY REQUIRED RESERVES AT ALL MEMBER BANKS Seasonally Adjusted (Dollar amounts in billions,based on monthly averages of daily figures) Period Total member bank deposits (credit 1/) __________ Time deposits Private demand deposits 2/ eois2 ______ U.S. Gov't. demand deposits 1966--July Aug. Sept. Oct. Nov. Dec. 245.8 245.6 245.5 244.4 244.0 244.6 128.1 128.8 129.2 128.6 128.3 129.4 112.6 112.3 112.4 111.7 111.6 111.7 5.1 4.5 1967--Jan. 247.7 251.0 254.0 111.4 112.6 113.6 113.0 114.5 116.0 116.7 117.5 117.6 118.2 118.7 118.6 4.8 5.1 5.1 5.6 4.0 2.6 2.9 4.0 4.5 5.2 5.6 4.6 4.0 4.0 4.1 3.5 May June July Aug. Sept. Oct. Nov. Dec. 262.4 266.1 268.4 270.8 272.9 273.2 131.5 133.3 135.3 137.2 138.7 140.8 142.8 144.6 146.3 147.4 148.6 149.9 1968--Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. 274.7 277.0 278.0 276.9 277.3 278.8 280.9 285.9 287.9 290.9 293.6 296.7 149.9 150.2 151.2 151.3 151.5 151.8 153.8 156.5 158.9 161.5 163.5 165.8 119.4 119.7 120.1 120.4 122.1 123.2 124.3 124.6 123.6 124.5 125.4 126.7 5.4 7.1 6.7 5.2 3.7 3.9 2.7 4.8 5.3 5.0 4.7 4.2 1969--Jan. Feb. Mar. p 295.1 294.8 292.4 163.2 161.0 160.5 126.6 127.2 126.8 5.3 6.7 5.0 Feb. Mar. Apr. 1/ 2/ 255.8 257.2 259.5 Includes all deposits subject to reserve requirements--i.e., the total of time, private demand,and U.S. Government demand deposits. Movements in this aggregate correspond closely with movements in total member bank credit. Private demand deposits include demand deposits of individuals, partnerships and corporations and net interbank balances. p - Preliminary. TABLE C-2a DEPOSITS SUPPORTED BY REQUIRED RESERVES AT ALL MEMBER BANKS Seasonally adjusted (Dollar amounts in billions, based on weekly averages of daily figures) Week ending: Total member bank deposits (credit) / Time deposits Private demand deposits 2/ U. S. Gov't. demand deposits 4 11 18 25 286.7 287.0 287.8 288.8 157.9 158.3 158.9 159.4 124.7 124.1 123.5 123.4 4.1 4.6 5.4 6.0 Oct. 2 9 16 23 30 290.3 290.4 289.9 289.5 292.7 160.1 160.8 161.1 161.9 162.2 124.0 123.9 125.1 123.7 124.3 6.2 5.7 3.7 3.9 6.2 Nov. 6 13 20 27 293.9 293.6 292.9 294.1 162.6 163.0 163.6 164.7 125.5 124.2 125.9 126.1 5.8 6.3 3.4 3.4 Dec. 4 11 18 25 294.8 296.4 296.9 296.7 165.3 165.9 166.1 166.1 126.3 126.3 126.4 126.9 3.2 4.2 4.4 3.7 1969--Jan. 1 8 15 22 29 297.4 297.2 294.9 294.4 293.8 165.5 164.4 163.9 162.8 162.1 127.9 128.2 126.7 126.0 124.9 4.0 4.5 4.3 5.6 6.8 Feb. 5 12 19 26 294.1 295.5 295.3 294.4 161.4 161.1 160.8 160.6 126.2 126.3 127.7 128.1 6.5 8.0 6.8 5.8 Mar. 5 12 19 26 293.6 293.8 292.1 291.2 160.4 160.6 160.5 160.6 127.6 126.7 126.6 126.7 5.6 6.5 5.1 3.9 1968--Sept. p - Preliminary. 1/ Includes all deposits subject to reserve requirements--i.e., the total of time, private demand, and U.S. Government demand deposits. Movements in this aggregate correspond closely with movements in total member bank credit. 2/ Private demand deposits include demand deposits on individuals, partner- ships and corporations and net interbank balances. TABLE C-3 MONEY SUPPLY AND TIME DEPOSITS AT ALL COMMERCIAL BANKS Seasonally adjusted (Dollar amounts in billions, based on monthly averages of daily figures) Monthly Money Supply Currency 1/ Private Demand Deposits Time Deposits 2/ Adjusted 1967--Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. 170.3 171.8 173.2 172.5 174.4 176.0 177.8 178.9 179.1 180.2 181.0 181.3 38.5 38.7 38.9 39.0 39.1 39.3 39.4 39.5 39.7 39.9 40.1 40.4 131.8 133.0 134.3 133.5 135.3 136.7 138.4 139.4 139.4 140.2 141.0 140.9 161.0 163.5 165.9 168.1 170.1 172.6 174.8 177.2 179.4 180.6 182.0 183.5 1968--Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. 182.3 182.7 183.4 184.3 186.1 187.4 189.4 190.3 189.5 190.2 191.9 193.1 40.6 40.7 41.1 41.4 41.6 42.0 42.2 42.6 42.7 42.8 43.2 43.4 141.7 141.9 142.) 143.0 144.5 145.4 147.2 147.6 146.7 147.4 148.7 149.6 184.1 185.2 186.7 187.1 187.6 188.2 190.4 193.8 196.6 199.5 201.9 204.3 1969--Jan. Feb. Mar. p 193.6 193.7 194.0 43.6 43.9 44.2 150.1 149.9 149.9 202.5 201.0 200.9 1/ 2/ Includes currency outside the Treasury, the Federal Reserve, and the vaults of all commercial banks. Includes (1) demand deposits at all commercial banks, other than those due to domestic commercial banks and the U.S. Government, less cash items in process of collection and Federal Reserve float; and (2) foreign demand balances at Federal Reserve Banks. p - Preliminary. TBLE C-3a MONEY SUPPLY AN TIME DEPOSITS AT ALL COMMERCIAL BANKS Seasonally Adjusted (Dollar amounts in billions, based on monthly averages of daily figures) Private Money Supply Week Ending 1968- -Sept. Currency P/ Demand Deposits Time Deposits 2/ adjusted 4 11 18 25 190.3 190.2 188.7 188.5 42.7 42.6 42.7 42.6 147.5 147.5 146.0 145.9 195.2 195.8 196.6 197.2 Oct. 2 9 16 23 30 190.0 189.9 191.0 189.4 189.9 42.7 42.9 42.8 42.8 42.9 147.3 147.0 148.1 146.5 147.0 198.1 198.7 199.1 200.0 200.4 Nov. 6 13 20 27 191.9 190.6 192.2 193.3 42.9 43.2 43.2 43.4 149.0 147.3 149.0 149.9 200.8 201.4 201.7 202.9 Dec. 4 11 18 25 192.9 193.1 192.7 192.7 43.5 43.5 43.4 43.4 149.4 149.6 149.2 149.3 203.7 204.1 204.5 204.6 1969-- -Jan. 1 8 15 22 29 193.7 195.4 193.8 193.6 191.6 43.4 43.5 43.5 43.6 43.5 150.3 151.9 150.2 150.0 148.1 204.1 203.3 202.8 202.1 201.5 Feb. 5 12 19 26 192.8 192.9 194.8 194.3 43.7 43.9 44.0 43.8 149.1 149.0 150.9 150.5 201.0 201.0 201.0 200.9 Mar. 5 12 19 26 193.8 193.6 194.0 194.6 43.8 44.1 44.2 44.3 150.0 149.6 149.9 150.3 200.7 201.0 200.7 200.8 1/ 2/ p - Includes currency outside the Treasury, the Federal Reserve and the vaults of all commercial banks. Includes (1) demand deposits at all commercial banks, other than those due to domestic commercial banks and the U.S. Government, less cash items in process of collection and Federal Reserve float: and (2) foreign demand balances of Federal Reserve Banks. Preliminary. FINANCIAL MARKET RELATIONSHIPS IN PERSPECTIVE (Monthlv averages and, where available, weekly averages of daily figures) Money arket Indicators Bond Yields Flow of Reserves. Bank Credit Bank M Corporate MuniciNonTotal BorrowFederal 3-month Free Money eserves ings Funds TreasU.S. New pal borrowed ReCredit Supply u y (In millions Rate ury Gov't. Issues (Aaa) Reserves serves Proxy of dollars) 4/ Bill (20 yr) (Aaa)/ (In n billions of (In billions of of dollar"s (Seasonally Adjusted) Period Period '68--Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. 1969--Jan. Feb. p Mar. p and Money Time Depsi Deposits 2 doars) dollars) -312 -341 -374 -386 -192 -240 -146 -192 -255 -327 -491 -598 -673 649 689 728 727 523 577 492 458 541 743 715 836 836 5.05 5.76 6.12 6.07 6.02 6.03 5.78 5.92 5.81 6.02 6.30 6.64 n.a. 5.17 5.38 5.66 5.52 5.31 5.23 5.19 5.35 5.45 5.96 6.14 6.12 n.a. 5.59 5.46 5.55 5.40 5.29 5.22 5.28 5.44 5.56 5.88 5.99 6.11 n.a. 6.57k 6.50* 6.64 6.65 6.50* 6.16 6.27 6.47 6.57 6.79 6.92 6.92* 7.38 4.28 4.13 4.28 4.26 4.12 4.00 4.23 4.21 4.33 4.50 4.58 4.74 4.97 26 -582 758 6.43 6.06 6.14 6.93 4.80 - 0.9 - 0.5 - 0.1 5 12 p 19 p 26 p -567 -672 -719 -736 734 872 775 963 6.75 6.75 6.82 6.88 6.16 6.03 6.02 5.94 6.16 6.20 6.29 6.22 -7.23 7.57 7.46 4.90 4.92 5.02 5.02 + - 0.5 - 0.2 + 0.4 + 0.6 + + Year 1968 First Half 1968 Second Half 1968 -210 -201 -218 548 567 529 5.58 5.39 5.77 Ave 5.36 5.29 5.42 ges 5.45 5.46 5.44 6.47 6.47 b.50 4.20 4.16 4.22 Recent variation in growth 11/29/67-7/3/68' 7/3/68-12/18/68 12/18/68-3/26/69 -159 -203 -562 515 516 5.25 5.90 6.54 5.24 5.34 6.11 6.47 6.47 7.04* 4.15 4.21 4.72 1969--Feb. Mar. P38 5.48 5.40 6.09 -266 -197 + 46 +137 +304 +493 + 29 +264 - 51 - 21 +302 - 82 -173 - 47 -189 + 88 +105 +107 +508 - 36 +215 +122 +244 +217 - 13 -148 + + + + + + + + + - 1.0 1.1 0.4 1.5 2.1 5.0 2.0 3.0 2.7 3.1 1.5** 0.3 2.4 0.8 0.2 1.7 0.9 + + + + + + + + + + + + *- Annual rates of increase + 7.2 + 8.6 + + 5.2 + 4.1 + + 5.3 + 2.2 + +12.8 + 8.1 + 9.0 + 3.5 +14.1 - 6.6 0.7 0.9 1.8 1.3 2.0 0.9 0.8 0.7 1.7 1.2 0.5 0.4 0.5 + + + + + + + + + + - 1.5 0.4 0.5 0.6 2.2 3.4 2.8 2.9 2.4 2.4 1.8 1.6 0.2 0.3 0.3 0.1 3/ 6.5 6.7 6.1 +11.3 + 5.1 +17.1 + 8.0 + 3.4 + 3.7 + 5.2 +18.1 - 6.7 * - issues carry a 10-year call protection. Includes issues carrying 5-year and 10-year call protection, Time deposits adjusted at all commercial banks. Base is change for month preceding specified period or in case of weekly periods, the first week shown. Average of total number of days in period. p - Preliminary. n.a. - Not available. - Reflects $400 million reduction in member bank deposits resulting from withdrawal of a large country bank from System membership. Percentage annual rates are adjusted to eliminate this break in series. March 28, 1969.
@FedFRASER