The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
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. December CONFIDENTIAL (FR) 11, 1970 MONETARY AGGREGATES AND MONEY MARKET CONDITIONS Recent developments (1) Deposit data now available for all of November indicate that growth in the narrowly-defined money supply was substantially stronger in the month than indicated either by the estimate based on partial data shown in the greenbook or by the preliminary week-by-week figures available to the Trading Desk in late November and early December. According to the latest estimates, the money supply grew at a 4-1/2 per cent annual rate in November, and its level was above the monthly figure consistent with a 4 per cent growth rate for the fourth quarter. The final money supply figure for October, while showing very little growth on average for the month, was also a bit above the initial estimate available at the last Committee meeting. A factor contributing to the larger-than-expected money supply growth recently may have been a bulge in transactions demand stemming from enlarged bond and stock market activity. (2) The bank credit proxy in November also ran a little above earlier projections, and the gap widened in early December. In addition to private demand deposits, U.S. Government deposits are larger than expected, reflecting sales of special securities to foreign official holders. Banks have continued to substitute time deposits for commercial paper and, until very recently, for Euro-dollars. Since the Board's December 1 announcement of regulatory actions affecting the opportunity cost of obtaining such funds, Euro-dollar borrowings have increased somewhat, although some of the increase may be seasonal. (3) The following table shows recent developments in the money supply and the adjusted credit proxy. Recent Paths of Key Monetary Aggregates (Seasonally adjusted, billions of dollars) Adjusted Credit Proxy Money Supply Indicated at. Last Meeting- Actual Results Indicated at . Last Meetin - Actual Results September 212.8 212.8 324.5 324.5 October 212.9 213.0 324.7 324.8 November 213.5 213.8 326.3 326.9 November 11 18 25 212.5 213.9 213.9 213.2 213.9 213.8 326.3 326.3 326.5 326.0 326.7 327.8 December 214.4 214.3 214.5 214. 9 326.2 327.8 328.3 331.0 1970 Month Week ending 2 9 % Annual Rates of Change 7 Annual Rates of Change Third Quarter (Sept. over June) 6. 1- October over Sept. November over October 1/ 2/ 17.2 17.2 0.7 4.5 6.0 7.8 Alternative A path of previous Blue Book, levels and rates of growth for the money supply have been converted to a revised basis. 5.2 per cent annual rate for third quarter average over second quarter average. (4) During the period since the mid-November Committee meeting, the Federal funds rate was moved down into a 5--5-1/2 per cent range, in the interest of promoting desired growth in the money supply. Most recently, Federal funds have been trading at the lower end of the indicated range, occasionally even dipping below, despite sizable Desk reserve absorbing operations. Member bank borrowings averaged $370 million in the past two statement weeks, not much above minimal levels, and about $60 million below the October-November average. Net borrowed reserves averaged around $100 million in the past two statement weeks, about $130 million below the October-November average, (5) The downtrend of market interest rates, begun earlier in the quarter, was sharply extended during the inter-meeting period, with yield declines in some short-term markets ranging to as much as another 3/4 of a percentage point, and those in long-term markets generally 1/2 to 5/8 percentage point. Further reductions in discount rate, continued weakness in the prime rate and the the economy, and anticipations of still further easing of monetary policy contributed to these declines. In the Treasury bill market, the key 3-month issue was most recently quoted around 4.85 per cent, about 40 basis points below its of the Committee meeting. The decline in level at the time long-term market yields occurred despite the very heavy calendars of new corporate and municipal bond offerings. Desk buying of nearly $300 million of Treasury coupon issues over the period contributed marginally to the declines in long-term rates. (6) The following table summarizes seasonally adjusted annual rates of change in major financial aggregates for selected periods. Past Year (Nov. bVoer Nov.) First Half of 1970 (June over December) Third Quarter (Sept. over June) Past Two Honthe (Nov. over Sept.) - 0.6 Total Reserves 5.1 -0.2 19.2 Nonborrowed Reserves 8.3 1.9 24.4 0.9 Money Supply 5.1 5.9 6.1 2.8 Large CD's (dollar amount)- $12.8 $1.7 $8.7 $2.2 5.7 15.5 13.1 2/ 6.1- 4.3 10.0 3/ 10.8- Total member bank deposits (Bank credit proxy) 9.9 3.3 24.1 12.1 Proxy plus Euro-dollars and other nondeposit sources 7.0 3.5 17.2 4.4 Total loans and investments 6.5 2.5 17.0 5.1 L&I plus loans sold outright to affiliates and foreign branches 6.2 4.5 13.9 3.1 Nonbank commercial paper 4.7 14.2 -17.7 3.5 1/ Other time and savings deposits Savings accountsat nonbank thrift institutions 10.0 Member bank deposits and related sources of funds Commercial bank credit (month end) NOTE: 1/ 2/ 3/ All items are averages of daily figures (with "other nondeposit sources" based on an average for the month of Wednesday data), except the commercial bank credit series, which are based on total outstanding on last Wednesday of month, and the nonbank commercial paper and thrift institutions series, which are end-of-month data. All additions to the total member bank deposit series are seasonally unadjusted numbers, since data have not been available for a long enough time to make seasonal adjustments. Actual dollar change over the period in billions. October 1969 to October 1970. September to October 1970. Prospective developments (7) Given recent developments, and with a Federal funds rate generally in a 5--5-1/4 per cent range, it appears that the money supply may grow at around a 9 per cent annual rate in December, and at about a 5 per cent annual rate for the fourth quarter. As to the adjusted bank credit proxy, it may be expected to expand at about a 17 per cent annual rate this month, and by around 8-1/2 per cent over the fourth quarter. The more rapid growth of the credit proxy in December, as compared with October-November, reflects not only greater expansion in private demand deposits but also larger inflows of U.S. Government and time deposits. Banks have issued a sizable amount of large CD's in recent weeks, in part to acquire securities at a time of declining interest rate expectations and partly in anticipation of seasonal CD run-offs in the latter part of December. (8) Against the background of a 5 per cent growth rate for money supply over the fourth quarter, the table on the following page shows three alternative growth paths for money, bank credit, and total reserves for the first quarter. Alternative A involves a 5 per cent money growth rate; alternative B, 6 per cent; and alternative C, 7 per cent. The last section of the text (paragraphs 14 through 19) discusses possible directive language for various policy courses. (9) The bank credit proxy figures shown in the table assume, for alternatives A and B, no further decline in Euro-dollar borrowings from recent levels. This neutral assumption seems to be about the best we can make, given uncertainties as to the ultimate pattern of bank -6Alternative Paths of Key Monetary Aggregates--Monthly and Quarterly and Quart~r1y Money Supply Alt.A Alt.B Alt.C Alt.A Alt.B Alt. C Alt.A Alt.B Alt.C 1970 November 213.8 213.8 213.8 326.9 326.9 326.9 28.7 28.7 28.7 December 215.4 215.5 215.5 331.5 331.6 331.6 29.2 29.2 29.2 216.7 216.9 217.1 333.9 334.6 334.7 29.5 29.6 29.6 February 217.5 217.9 218.3 335.7 337.3 337.6 29.4 29.5 29.6 March 218.2 218.8 219.4 338.2 340.4 340.9 29.5 29.7 29.8 1971 January Adj. Credit Proxy Total Reserves Per cent Annual Rates of Growth December 9.0 9.5 9.5 17,0 17.5 17.5 18.5 18.5 18.5 January 7.0 8.0 9.0 8.5 11.0 11.0 15.0 16.5 17.0 February 4.5 5.5 6.5 6.5 10.5 - 5.0 - 3.0 - 1.0 March 4.0 5.0 6.0 9.0 11.5 5.5 7.5 9.5 4th Q 1970 5.0 5.0 5.0 8.5 9.0 5.5 5.5 5.5 1st Q 1971 5.0 6.0 7.0 8.0 11.0 5.0 7.0 8.5 9.5 11.0 9.0 10.5 response to recent Board actions and as to the likely changes in the recent substantial differentials in costs of Euro-dollars as against Even under these alternatives, it should be recognized domestic funds. that a resumption of decline in Euro-dollar borrowings is a real possibility. Under alternative C, declining market interest rates would very likely encourage some further shift away from Euro-dollar borrowings absent additional Board action. Outstanding bank-related commercial paper is expected to continue declining, though at a slower pace. In general, growth in time and savings deposits other than large CD's may be dampened as post-strike auto sales tend to impinge on the personal saving rate. Under alternative A, such growth is projected to be a little less in the first quarter than in the fourth, but under alternatives B and C, time deposits are assumed to grow somewhat more rapidly because market interest rates would be relatively lower. Bank interest in large CD's is likely to be fairly strong, as they continue to want to acquire market securities and as business loan demand picks up. (10) The range of money market conditions, as typified by the Federal funds rate, that would be expected to be consistent over the next few weeks with the various paths for the aggregates are summarized below. Federal funds rate Annual rates of increase in money supply 1st Qtr. 4th Qtr. 5--5-1/2 5% 5% B 4-5/8--5-1/8 5% 67. C 4-1/4--4-3/4 5% 77 Alternative A Weekly figures for the aggregates between now and the next FOMC meeting consistent with these paths are shown in the table on page 9. (11) In the case of alternative A, the Federal funds range is wide enough to allow for some tightening from recent levels. This may be required to limit money growth in the first quarter to 5 per cent should the Greenbook projection of a 10-1/2 per cent annual rate of growth in nominal GNP in the first quarter be realized. Since the last meeting of the Committee, the demand for money has proven to be somewhat stronger, at given Federal funds rates, than the staff anticipated. This greater demand may have been temporary, however, resulting from a sudden surge in financial market transactions, as noted earlier. Because of uncertainties as to the source of recent money demand and as to transactions needs associated with such a large bulge in prospective GNP growth, a fairly wide Federal funds rate range is also shown for alternatives B and C. If demand for money at given Federal funds rates continues to be greater than anticipated--as a result of financial transactions or the need to finance a temporary large post-strike bulge in GNP--the Committee may be faced with the possibility of either permitting the Federal funds rate to rise above the ranges shown in paragraph (10) for any particular alternative chosen, or permitting, at least temporarily, a higher money growth rate than contemplated. (12) Between now and the next Committee meeting (mid- January), the 3-month Treasury bill rate may move through intervals of both downward and upward pressure, in response to a succession of seasonal and post auto-strike influences. Consequently, the yield Alternative Weekly Paths of Key Monetary Aggregates loney Supply Adj. Credit Proxy Total Reserves AIt.A Alt.A Alt. B Alt.C Alt.A Alt.B Alt.C 214.9 214.9 214.9 331.0 331.0 331.0 28.9 28.9 28.9 215.5 215.5 330.2 330. 2 330.2 29.2 29.2 29.2 215.4 215.4 332.5 332.7 332.7 29.3 29.3 29.3 216.3 1971 January Alt.C 215.3 9 Alt.B 215.5 1970 Decenber 216.4 216.5 332.9 333.2 333.3 29.2 29.2 29.2 215.5 215.6 215.7 333.6 334.0 334.0 29.7 29.7 29.7 216.3 216.5 216.7 332.7 333.3 333.4 29.6 29.6 29.6 216.9 217.2 217.4 333.0 333.8 333.9 29.6 29.6 29.6 -10- may fluctuate in a 4-1/2--5 per cent range, assuming the Federal funds rate stays around 5--5-1/8 per cent and the net reserve position of banks is mostly on the negative side, with borrowings at minimal levels (apart from necessitous borrowing of two banks). If the Federal funds rate were to move above this range--for example, in order to restrain money supply growth--an appreciable rise in the 3-month bill rate might develop; the bill rate might move back up to around 5-1/4 per cent, and the downward tendency of other interest rates might well be reversed. If, on the other hand, the Federal funds rate were to be persistently below 5 per cent, the bill rate might move toward the lower end of, or even below, the range shown, particularly in view of the absence of a Treasury cash financing in January. A declining bill rate would likely be accompanied by some downdrift in other short-term rates, although yield spreads of other short rates over the bill rate have narrowed since early November. Any further downdrift in short rates would intensify pressures for a further reduction in the prime rate. (13) Long-term interest rates may move downward somewhat further even in the absence of short-term rate declines, reflecting a seasonal pick-up in long-term fund flows after year-end and some moderation in the supply of securities coming to market. There will be the usual lull in new corporate and municipal issues between now and the turn of the year; although sizable offerings seem likely in January, the volume in prospect appears to be somewhat below recent months. Agency offerings are likely to diminish further in view of the greater availability of credit at private financial institutions. -11The next Treasury financing--its mid-February refunding--will not be announced until January 20, shortly after the mid-January FOMC meeting. No significant amounts of new cash are likely to be raised by the Treasury until around the time of this refunding and then again in March. Under the circumstances, if short-term interest rates do show a sustained downward tendency in the period immediately ahead, a considerable rally in bond markets may again develop. Possible directive language (14) This section presents possible language for the second paragraph of the directive for the three alternative policy courses discussed above, as well as a fourth possibility involving renewal of the present directive language. (15) Alternative A. This alternative is proposed for possible use if the Committee decides upon a 5 per cent target growth rate for the money supply in the first quarter: To implement this policy, the Committee seeks to promote [DEL: easing of some conditions in credit markets and moderate growth in money and attendant bank credit expansion over the months ahead with allowance for temporary shifts in money and credit demands related to the auto strike.] System open market operations until the next meeting of the Committee shall be conducted with a view to maintaining bank reserves and money market conditions consistent with those objectives. -12- Deletion of the phrase "some easing of conditions in credit markets" is proposed in light of the analysis in paragraphs (10) and (11) above suggesting that some rise in the Federal funds rate might be required as the quarter progresses to keep the money supply growth rate from exceeding 5 per cent. While some rise in the Federal funds rate would not necessarily be inconsistent with continued declines in long-term rates, particularly if over-all credit demands slacken, it is assumed that the Committee would not want to indicate that it was seeking "to promote" some easing of credit market conditions under a policy course that contemplates the possibility of some firming of money market conditions. (16) As indicated, it is also proposed to delete the clause "with allowance for temporary shifts in money and credit demands related to the auto strike." This clause had been included in the previous directive to reflect the Committee's willingness, for reasons related to the auto strike, to accept money growth rates in the fourth and first quarters that were, respectively, below and above its longer-run target rate. At present, however, if the Committee adopts this alternative its target for the first quarter presumably will not exceed its target for the longer run. (For the same reason, deletion of the clause in question is proposed in the two following alternatives also.) (17) Alternative B. This alternative is proposed for possible use if the Committee decides to set its target for money at the 6 per cent rate indicated by the revised data to have prevailed in the three quarters before the auto strike: -13- To implement this policy, the Committee seeks to promote some easing of conditions in credit markets and moderate growth in money [DEL:and attendant bank credit expansion over the months ahead AT ABOUT THE AVERAGE RATE PREVAILING IN THE FIRST THREE QUARTERS OF 1970, with ATTENDANT BANK CREDIT EXPANSION allowance for temporary shifts auto in money and credit demands related to the strike.] System open market operations until the next shall be conducted meeting of the Committee with a view to main- taining bank reserves and money market conditions consistent with those objectives. (8) Alternative C. This alternative is suggested for possible use if the Committee decides to step up its target growth rate for money to 7 per cent: To implement this policy, the Committee seeks to promote some easing of conditions in credit markets and moderate [DEL: SOMEWHAT MORE RAPID growth in money and attendant bank credit expansion over the months ahead THAN PREVAILED IN THE FIRST THREE QUARTERS OF 1970, with ATTENDANT BANK CREDIT EXPANSION allowance for temporary shifts in related strike.] auto the to money and credit demands System open market operations until the next meeting of the Committee shall be conducted with a view to maintaining bank reserves and money market conditions consistent with those objectives. Deletion of the word "some" from the statement that "the Committee seeks to promote some easing of conditions in credit markets" is -14suggested because of the greater degree of credit market easing likely to ensue under this policy course. (19) Alternative D. There remains the possibility that, in light of the expected first-quarter surge in nominal GNP in the aftermath of the auto strike, the Committee may wish to accept a temporarily higher money growth rate during the first quarter than it would contemplate at this time for the longer run. To articulate such a policy, the Committee could decide simply to renew the second paragraph of the existing directive without change: To implement this policy, the Committee seeks to promote some easing of conditions in credit markets and moderate growth in money and attendant bank credit expansion over the months ahead, with allowance for temporary shifts in money and credit demands related to the auto strike. System open market operations until the bext meeting of the Committee shall be conducted with a view to maintaining bank reserves and money market conditions consistent with those objectives. If the Committee adopts this alternative it could instruct the Manager to maintain essentially prevailing money market conditions--as typified by a Federal funds rate of 5 to 5-1/4 per cent--so long as the money supply in the weeks ahead appears to be on a path consistant with growth in the first quarter at an annual rate in a range between, say, 5 and 7 per cent. Table 1 STRICTLY CONFIDENTIAL (FR) PATHS OF KEY MONETARY AGGREGATES DECEM I R 11, 1970 SEASONALLY ADJUSTED Adjusted Credit Proxy Period Money Supply Path 2 Patth 3 Path of Current sof 4 Current Po roj. Proj. Nov. 17 Nov. 17 U.S. Government Demand Deposits Demand Deposits as of Nov. 17 Time Deposits 6 7 Path Current of Proj. Nov. 17 Current P rol. Nondeposit ources of Funds Sources of Funds Path of Nov. 17 T Total Reserves 10 11Path Current asof Prol. Nov. 17 Current Proj. Monthly Pattern in Billions of Dollars 1970- 311.1 315.8 321.9 324.5 June July Aug. Sept. Oct. Nov. Dec. p (proj.) 311.1 315.8 321.9 324.5 209.6 210.6 211.8 212.8 209.6 210.6 211.8 212.8 324.7 326.3 328.1 324.8 326.9 331.5 212.9 213.5 214.9 213.0 213.8 215,4 4.8 4.8 202.2 208.2 213.2 218.5 202.2 208.2 213.2 218.5 20.7 19.8 18.8 16.5 20.7 19.8 18.8 16.5 27.9 28.0 28.6 29.2 27.9 28.0 28.6 29.2 221.8 224.7 227.7 222.2 225.0 229.6 14.2 12.8 12.2 14.2 12.7 11.9 29.4 29.6 29.8 29.4 29.5 30.0 Annual Percentage Rates of Change--Quarterly and Monthly 0.5 6.5 17.2 4.5 0.5 6.5 17.2 8.3 +5.9 +5.8 +6.1 +4.0 +5.9 +5.8 +6.1 +5.0 +1.4 +14.1 +32.2 +17.0 +1,4 +14.1 +32.2 +20.5 -2.9 2.6 19.2 6.0 -2.9 2.6 19.2 9.0 Aug. Sept. 7.0 18.1 23.2 9.7 7.0 18.1 23.2 9.7 +2.3 +5.7 +6.8 +5.7 +2.3 +5.7 +6.8 +5.7 +11.4 +35.6 +28.8 +29.8 +11.4 +35.6 +28.8 +29.8 0.5 6.0 23.3 27.5 0.5 6.0 Oct. Nov. Dec. 1970- 0.7 6.0 6.5 1.1 7.8 17.0 +0.6 +3.5 +8.0 +1.1 +4.5 +9.0 +18.1 +15.5 +16.0 +20.3 +15.1 +24.3 -3.8 11.5 10.5 -3.6 4.0 21,0 1st 2nd 3rd 4th Qtr. Qtr. Qtr. Qtr. June July p (proj.) 23.3 27.5 Weekly Pattern in Billions of Dollars Oct. 14 21 28 323.9 324.4 324.9 323.9 324.4 325.0 212.6 213.9 212.3 212.7 213.9 212.2 222.0 222.8 223.0 222.0 222.8 223.0 14.4 14.1 13.6 14.4 14.1 13.6 29.2 29.5 29.3 29.2 29.5 29.4 Nov. 4 11 25 p 1970. 325.5 326.3 326.3 326.5 325.5 326.0 326.7 327.8 212.7 212.5 213.9 213.9 212.7 213.2 213.9 213.8 223.0 224.1 224.7 225.4 223.4 223.8 224.9 226.1 13.3 12.9 12.9 12.7 13.2 13.0 13.0 12 .4 29.3 29.4 29.6 29.8 29.4 29.4 29.5 29.4 2 p 9 p 16 (proj.) 326.2 327.8 327.6 328.3 331.0 330.3 214.4 214.3 214.6 214.5 214.9 215.5 226.1 226.9 227.4 227.1 228.4 12.5 12.3 12.2 11.7 29.7 29.8 29.7 29.7 29,7 18 Dec. 229.1 12.0 12.0 30.0 NOTES: Annual rates of change other than those for the past are rounded to the nearest half per cent. Money supply path "as of November 17" has been adjusted to reflect the adjustments to the money supply series published November 27, 1970. FR 712 -D Table 2 CONFIDENTIAL (FR) AGGREGATE RESERVES AND MONETARY VARIABLES DECEMBER 11,1970 RETROSPECTIVE CHANGES, SEASONALLY ADJUSTED (In per cent, annual rates based on monthly averages of daily figures) Reserve Aggregates 1 Period 2 Total Reserves Monetary Variables 3 Nonborrowed Reserves Total 4 Member Bank Adjusted 5 Credit Proxy Total Addenda Money Supply 6 7 Private Currency Demand SDeposits Annually 1968 1969 8 9 Depost Adjusted Instt. Deposits 10 Commeral Paper ,Deposits + 7.4 + 6.0 + 7.9 + 2.4 +11.1 - 5.0 + 6.3 + 3.4 - 1.2 + 6.5 + 5.4 + 4.7 + 0.1 - 3.5 - 6.6 + 4.8 + 1.9 +27.6 +3.3 + 3.5 + 7.8 + 5.3 + 7.8 + 4.3 +14,0 - 4.8 -0.1 - 9.4 + 0,1 - 4.3 + 2.0 + 0.8 + 1.6 + 4.5 + 6.2 + 0.3 -12.7 - 0.4 + 2.3 + 1.4 +31.0 +22.4 - 2.9 + 2.6 - 0.4 + 4.1 + 0.5 +19.2 +24.4 + 0.6 + 6.0 +24 1 +17.2 + 5.9 + 5.8 + 6.1 + 6.1 + 9.4 + 3.3 + 5.3 + 5.3 + 6.7 + 1.4 +14.1 +32.2 + 1.7 + 6.9 +10.0 +13.2 +14.3 -17.7 + 7.7 + 1.6 + 1.2 + 2.7 + 1.5 - 3.7 + 3.7 +40.7 -17 9 + 5.5 +12.1 - 7.9 +13.1 + 0.8 + 2.4 + 1.8 + 0.6 + 7.9 + 7,9 + 2.6 + 0.8 - 3.7 - 1.2 + 3.7 - 0.7 + 3.0 + 1.9 +20.0 +11.7 +34.2 + 5.2 + 5.2 + 9.9 - 8.0 + 1.2 +11.2 - 4.2 + 2.8 + 6.6 + 3.6 +19.7 +10.9 +11.4 + 8.1 + 5.3 + 7.0 +71.3 +10.7 -37.3 +35.6 +28.8 +29.8 +13.3 + 6.1 -88.4 -14.1 +10.5 +53.1 +20.3 +15.1 +10.8 +31.6 n.a. - 6.3 + 7.8 - 1.6 + 6.0 - 3.0 + 9.0 -4.0 let Half 1969 2nd Half 1969 + 0.7 - 3.9 - 3.7 - 2.4 - 3.5 - 4.6 let Half 1970 - 0.2 + 1.9 Quarterly 3rd Qtr. 1969 4th Qtr. 1969 - 9.3 + 1.4 + 7.8 + 3.1 Semi-annually 1st Qtr. 1970 2nd Qtr. (1970 3rd Qtr. 1970 Monthly 1969, Sept. Oct Nov Dec 1970 -11.7 Jan + 3.1 -12.0 + 9 7 +97 + 6.3 Feb. n.a. + 6.5 + 7.2 -15.6 + 7.5 Mar. -42 - 8,0 +14.0 3.5 - 5.5 +10.7 + 9.4 - 4.1 +12.3 + 9.9 + 5.2 + 2,3 - 6.8 +12.9 +10.5 + 7.8 +10.3 +15.3 +21.3 -13.9 + 0.5 +25 4 -19.0 +16 8 May June + 6.2 +58 +13.7 - 1.2 + 7.0 + 2,5 + 3.0 + 2.2 July Aug. Sept. + 6.0 +23.3 +27.5 -16.1 +48.8 +40.1 +22.7 +29.2 +19.0 +18.1 +23.2 + 9.7 + 5.7 + 6.8 + 5.7 + 7.5 + 4.4 + 2.5 + 8.9 c t. - 3.6 + 4.0 - +10.1 +13.9 + 1.1 + 7.8 + 1.1 + 4.5 + 7.5 + 2.5 Apr. Nov (p) I NOTE: Aggregate 0.5 + 4.7 I - 4.5 I I + 6.6 - 0.7 + 4.4 +35.7 + 0.4 I reserve series have been adjusted to eliminate changes in percentage reserve requirements against deposits, but reserve requirements 1969, and requirements on bank-related commercial paper are included beginning on Euro-dollar borrowings are included beginning October 16, October 1, 1970. n,a. FR 712 - E CONFIDENTIAL (FR) Table 3 AGGREGATE RESERVES AND MONETARY VARIABLES DECEMBER 11, 1970 SEASONALLY ADJUSTED (Based on averages of daily figures) Aggregate Reserves 1 Period Total Member Bank Deposits 2 Nonb Nonborrowed Required Total U S. Govt ITotal Demand 1 4 (In billions of dollar!1) (In millions of dollars) Jan Feb Mar 28,139 28,060 27,972 27,318 27,206 27,024 27,902 27,832 27,729 297.0 296.7 294.2 198.1 199.3 200.1 43.6 43.8 44.1 154.5 155.5 156.0 203.7 203.2 202.5 Apr May June 27.775 28.235 28,056 26,754 26 888 26.705 27,614 27,942 27,742 295.4 295.1 292,6 201.0 201.6 202.4 44.2 44.5 44.8 156.8 157.1 157.6 202.1 201,7 201.2 July Aug Sept 27,530 27.401 27,402 26,275 26,214 26,383 27,334 27,161 27,144 288.0 285.3 285.7 203.1 202.6 202.9 45.0 45.2 45.3 158.1 157.4 157.6 Oct Dec 27,354 27 783 27,928 26,210 26,538 26,806 27,129 27,548 27,707 283.5 285.8 285.8 203.2 203.5 203.6 45.6 45.9 46.0 Jan Feb Mar 28,001 27,722 27,723 26,966 26 615 26,782 27,823 27,523 27,536 284,8 282.9 286.2 205.2 204.5 206.6 Apr June 28 216 27,890 27,902 27,350 26,916 27,056 28,046 27,692 27,713 290.2 289. L 290.5 July Aug Sept 1969' 28,041 28,585 29,240 26,694 27,780 28,708 27,896 28,408 29,024 29,385 29.482 28,928 29,041 29,497 29,205 29,496 21.8 20.2 18.9 181.9 182.9 183.6 18.2 17.4 15.8 184.0 184.3 185.4 198.1 195.4 194.8 14.1 12.5 12.0 157.6 157.6 157.7 194.2 194.0 194.6 46.2 46.4 46.7 159.0 158.1 159.8 208.3 209.2 209.6 47.1 47.7 47.8 296.0 303.2 308.0 210.6 211.8 212.8 29,134 29,234 310.6 314.2 29,353 29,142 28,803 29,930 28,820 29,155 29,138 29,250 29,021 p 29,361 29,394 29,516 29,437 28,970 28,957 29,167 28,852 2 p 29,718 29,304 Nov 1970- May Oct Nov. 1970 Oct. (p) 7 14 21 28 Nov 4 11 18 25 Dec. I n.a. n.a. 307.5 25,5 184.0 182.9 182.8 305.7 303.8 304.2 26.1 26.6 27.5 11.5 11.1 11.2 182.6 182.9 183.4 302.2 305.5 305.7 27.9 28.2 29.0 193.3 193.5 195.3 10.6 10.6 11.5 182.7 182,9 183.8 304.8 303.4 306.1 29.1 30.0 30.0 161.2 161.6 161.9 198.5 200.3 202.2 12.9 13.2 13.2 185.6 187.1 189.0 309,6 309.3 311.1 31.8 32.0 31.0 162.5 163.7 164.6 164.5 165.1 208.2 213.2 218.5 315.8 321.9 324.5 28.8 28.4 29.7 222.2 225.0 16.9 19.0 21.7 23.2 23.9 191.3 194.2 196.8 213.0 213.8 48.1 48.2 48.2 48.5 48.6 199.1 201. 1 324.8 326.9 30.5 29.5 310.6 309.5 310.2 311.4 213.7 212.7 213.9 212.2 48,4 48.5 48.6 48.5 165.4 164.2 165.3 163.7 221. 0 222.0 222.8 223.0 22, 7 23.2 23.3 23.4 198.3 198.8 199.5 199.6 325.4 323.9 324.4 325.0 29,045 29,237 29,302 29,204 312.3 313.0 313.7 315.4 212.7 213.2 213.9 213.8 48.6 48.6 48.7 48.6 164.1 164.5 165.2 165.2 23. 4 223.8 224.9 226.1 23.4 23.5 23.7 24.3 200.0 200.3 201.2 201.7 325.5 326.0 326.7 327.8 29,330 316.6 214.5 48.6 165.9 227.1 24.7 202.4 328.3 NOTES: Aggregate reserve series have been adjusted to eliminate changes in percentage reserve requirements against deposits, but reserve requirements on Eurodollar borrowings are included beginning October 16, 1969, and requirements on bank-related commercial paper are included beginning October 1, 1970. Adjusted credit proxy includes mainly total member bank deposits subject to reserve requirements,, bank-related commercial paper, and Euro-dollar borrowings of U.S, banks. Weekly data are daily averages for statement weeks. Monthly data are daily averages except for nonbank commercial FR 712-F paper figures which are for last day of month. Table 4 MARGINAL RESERVE MEASURES (Dollar amounts in millions, based on period averages of daily figures) Member d Free reserves Monthly (reserves weeks ending in): 1969--January February March April May June July August September October November December Excess reserves Total Banks Borrowings R e s e r v e C i ty_ Major banks Other 8 N.Y. Outside N.Y. - 477 - 580 - 635 - 844 -1,116 -1,078 -1,045 - 997 - 744 - 995 - 975 - 849 359 256 202 187 243 277 266 214 282 195 238 278 836 836 837 1,031 1,359 1,355 1,311 1,211 1,026 1,190 1,213 1,127 - 759 - 916 751 687 765 736 -1,134 - 706 - 374 - 271 928 1,126 880 865 924 907 1,317 881 609 467 148 106 90 227 165 -190 169 210 129 178 159 171 183 175 235 196 218 408 42 - 718 -1,219 -1,451 -1,201 -1,078 273 75 230 185 153 991 8 15 22 29 1,681 1,386 1,231 93 360 467 139 5 12 19 26 - 822 854 589 522 188 230 92 138 1,010 1,174 681 660 114 382 2 9 16 23 30 - 482 348 144 507 389 178 415 356 -47 272 7 14 21 28 - 46 409 388 242 4 11 1,q 25 p - 2 p 9 p - 1970--January February March April May June July August September Oct.ber November p 1 970--July Aug. Sept. Oct. Nov Dec. p - 1 Preliminary. - Country 149 215 254 260 397 288 364 256 222 293 250 220 253 304 293 275 493 550 608 621 485 464 456 329 232 289 287 119 228 217 348 273 274 312 293 261 414 278 188 290 261 291 187 119 103 56 304 283 371 395 388 333 240 274 321 286 21 56 303 300 229 262 231 130 188 198 660 763 500 460 661 79 160 89 75 103 221 343 224 259 324 179 117 94 49 155 352 41 200 196 398 450 588 433 21 L6 305 310 342 292 89 73 133 117 105 163 166 327 318 282 164 108 423 445 310 435 11 69 311 282 295 287 86 65 34 40 60 153 394 138 454 291 86 301 264 45 27 1,294 131 62 58 85 123 57 89 81 83 106 120 268 140 218 143 101 12 29 11 0 86 -- 4- Table 5 SOURCE OF FEDERAL RESERVE CREDIT Retrospective Changes in millions of dollars, based on weekly averages of daily figures) (Dollar amounts Total Federal Reserve credit Period (Excl. float) Year: 1968 (12/27/67 - 12/25/68) 1969 (12/25/68 - 12/31/69) +3,757 +5,539 Total U.S. Government securities 1Repurchase holdings +3,298 +5,192 Bills 1/ +2,143 ( +4,279 ( --- Federal Agency Other ) ) _ agreements + +1,176 + 707 Securities 21 206 + S 3 67 Bankers' acceptances + Member banks borrowings 52 35 + + 514 245 Weekly: 632 444 188 104 303 387 295 155 (+ 71) ( -) ) ( -) ( -- 247 196 9 452 221 164 493 201 ) ) 133 123 250 506 196 103 263 40 201 ) ) ) ) 18 56 83 205 263 52 136 153 214) -+ 09 (- 150) + 407 ( -) 369 19 202 500 10 22 115 105 + + 337 177 19 163 1 8 15 22 29 + 544 + 231 +1,181 - 185 - 460 + Aug. 5 12 19 26 + + + - 362 591 231 343 + + + + 293 266 644 209 Sept. 19/U 2 9 16 23 30 + + - 189 473 248 -982 + 689 + + 31 ( 193 ( - 236 (- + 358 (222 (+ 7 14 21 28 - 482 - 5 + 224 - 479 - 4 11 18 25 + + - 692 48 671 142 + 2 9 + - 986 301 -- July Oct. Nov. Dec. 445 (+ - 73 ( -( + - - 145) - 638 (- 29) 42) 42 (- 165 -- ( ( 16 ( 63 ( 241 (- ) ) --- I 90) 256) 346) ----- - 94 516 (32 (- 144) 100) + 1/ Figures in parenthesis reflect reserve effect of match sale-purchase agreement. . .1. Table 6 MAJOR SOURCES AND USES OF RESERVES Retrospective and Prospective Changes (Dollar amounts in millions, based on weekly averages of daily figures) Facto Period Federal Reserve credit (excl. float) 1/ r s rights (S u p p affecting Currency outside Treasury banks gn ind operations icat Gold nd spec. dr. of y Float s e f +3,757 +5,539 Weekly: 1970--Apr. 1 8 15 22 29 + 179 - 720 + 947 + + - 222 17 + 6 13 20 27 +1,047 + 131 + 512 3 10 17 24 + 639 - 213 + 224 - 449 1 8 15 22 29 + 544 + 231 +1,181 + - - 185 460 5 12 19 26 + + + 362 591 231 - 343 2 9 16 23 30 + + 189 473 - 248 982 + 7 14 21 28 - 4 11 18 25 p - 48 + 671 - 142 June July Aug. Sept. Oct. Nov. Dec. 2 p 9 p - Other nonmember deposits and and gold loans F.R. on ct reserves) f Year: 1968 (12/27/67-12/25/68) 1969 (12/25/68-12/31/69) May = reserves Foreign deposits + - -3,221 -2,676 928 813 +1,309 + 241 + - 67 54 + - -2,067 - + + 24 78 - - + + - 37 + - 35 - 17 18 22 26 + - 15 11 12 50 689 - + 224 - 479 + - 692 - + - 10 4 9 15 + - 4 6 15 210 482 5 113 - 20 7 105 45 21 152 - 14 45 + + 100 169 + 95 + 271 + 1 + + 230 1 24 1 - 271 86 + + 17 18 + 16 - 397 + - 1 +1,563 +1,340 44 213 40 + 4 +1,508 +1,448 79 44 23 39 - 1 reserves 290 + 44 84 - L reserves 192 33 55 + + - .1 1/ For retrospective details, see Table 5. p - Preliminary. reserves 163 174 354 312 + + 986 Excess ress 32 - 28 - 301 Required reserves 98 174 51 + - = Bank use of reserves in total 54 100 869 -898 S34 664 + accounts Change 5 8 - 187 - 39 4 4- - 55 + 108
@FedFRASER