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Content last modified 6/05/2009.
February 14, 1975
STRICTLY CONFIDENTIAL (FR) Class I FOMC
MONETARY AGGREGATES
AND
MONEY MARKET CONDITIONS
Prepared for the Federal Open Market Committee
By the Staff
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
STRICTLY CONFIDENTIAL (FR)
Class I - FOMC
February 14, 1975
MONETARY AGGREGATES AND
MONEY MARKET CONDITIONS
Recent developments
(1)
M1 contracted at an annual rate of about 9½ per cent in
January, and, with recent data suggesting only modest growth in February,
a net contraction in M 1 during the two-month target period now seems
likely, as the table shows.
Flows into time deposits other than money
market CD's have been generally well sustained, but, with M 1 weak,
Growth of Monetary Aggregates and RPD's
in January-February Period 1
Reserve and Monetary Aggregates
(Growth at SAAR in per cent)
Range of
Tolerance
Latest Estimates
-2.3
RPD
MEMO:
Federal Funds rate
(per cent per annum)
7 --10
4.7
6k--9t
4.6
64--7 2/
Ave, for statement
week ending
7.17
Jan. 22
6.99
29
6.46
Feb. 5
6.28
12
1/
These figures do not incorporate the regular quarterly benchmark revision
of monetary aggregates that will be published this coming Thursday.
Revisions in the series (based in large part on the October call report)
were relatively minor; the December level for M was raised by about
$500 million and the rate of growth for M1 in 1974 was raised from 4.6 to
4.7 per cent. All tables on subsequent pages of this report (with the
exception of Tables 1 and 2 following the charts) are based on the new
series. The new and old series are compared in appendix table V .
2/
The range shown reflects the reduction in the lower limit from 6½ per
cent on February 6.
-2M 2 appears to be growing at only about a 4½ per cent annual rate in the
January-February target period--also well below the lower end of the
Committee's range of tolerance.
In the face of continued weak loan
demands, banks have reduced their reliance on non-deposit sources of
funds since year-end and have not pressed aggressively to issue large
CD's.
As a result, the bank credit proxy is expected to show very little
growth during the January-February period.
(2)
Immediately after the January FOMC meeting, the Account
Manager began providing reserves with a view to achieving an average
Federal funds rate around 7 per cent.
When incoming data showed the
monetary aggregates expanding at annual rates below the lower ends of the
Committee's ranges of tolerance, however, the Desk moved to ease money
market conditions.
As a result, by the statement week ending February 5,
the prevailing funds rate had declined to about 6½ per cent, the lower
limit of the range of tolerance agreed upon at the January meeting.
On
February 5, the Committee concurred in the Chairman's recommendation to
reduce the lower limit of the funds rate constraint to 6¼ per cent, and
in the statement week just ended the average rate was 6.28 per cent,
As the funds rate dropped, member banks reduced borrowings from the
discount window further to near minimal levels; in the first two weeks
of February such borrowing averaged about $95 million--more than half
of which was special, longer-run borrowing--as compared with an average
of around $400 million in January.
-3(3)
The further decline in the Federal funds rate, and the
February 3 reduction in the discount rate to 6¾ per cent, have contributed
to sharp reductions in other short-term interest rates as well.
These
declines have ranged generally from 50 to 100 basis points since the last
Committee meeting.
Rates on private short-term instruments have registered
the largest changes and are now 200-300 basis points below their year end
levels.
per cent.
The 3-month Treasury bill has traded most recently around 5.45
Although the rate on prime business loans at leading banks
has also been reduced during the inter-meeting period, the level now
prevailing at most key banks is 8¾ or
9 per cent; this is high relative
to the 6-3/8 per cent rate on 90-119 day commercial paper.
(4)
The large inter-meeting declines in short-term rates
As
have contributed to a strong rally in long-term securities markets.
a result, yields on corporate and municipal bonds are now 40-60 basis
points below their mid-January levels.
In the market for longer-term
Treasury issues, yields have also moved lower, notwithstanding the
Treasury's enlargement of its February refinancing to raise new money
and the very heavy volume of Federal deficit financing forecast for the
weeks and months ahead by the new Federal Budget.
The new note and
bond issues offered in the Treasury refinancing were all well received
and have most recently traded at premiums as much as 1 point above the
average prices at which they were initially auctioned.
(5) Savings flows to non-bank thrift institutions--like those
to banks--have displayed significant growth in January.
However, with
mortgage demands remaining weak, these expanded flows have been used
for the most part to repay debt and rebuild liquid asset holdings.
The
-4growth in savings flows, along with the continued modest volume of new
mortgage demands and the general decline in other interest rates, has
resulted in further reductions of some 40 basis points in conventional
mortgage rates since the turn of the year.
(6)
The table on the following page shows (in percentage
annual rates of change) selected monetary and financing flows over various
recent time periods.
Appendix table III compares money supply growth rates
computed on a quarterly-average basis with those computed on a lastmonth-of-quarter basis.
Projected figures on the two bases are shown in
Appendix table IV for the alternatives presented in the next section.
Calendar
Year
1974
Total reserves
Past
Twelve
Months
Jan.'75
over
Jan.'74
Past
Six
Months
Jan.'75
over
July '74
Past
Three
Months
Jan.'75
over
Oct.'74
Past
Month
Jan.'75
over
Dec.'74
8.6
6.6
4.2
8.2
10.0
10.6
8.7
21.6
24.7
20.9
8.8
8.5
3.7
1.6
1.4
4.7
4.1
1.1
-.1
-9.3
M 2 (M1 plus time deposits
atcommercial banks
other than large CD's)
7.4
7.0
5.4
5.1
2.9
M 3 (M2 plus deposits at
thrift institutions)
6.7
6.6
5.6
6.4
5.4
Total member bank deposits
(bank credit proxy adj.) 10.2
9.4
4.5
5.5
3.6
Loans and investments of
commercial banks 2/
8.3
7.5
.1
-.2
8.2
2.2
2.2
1.6
2.2
2.6
.4
.3
.4
.2
-.6
Nonborrowed reserves
Reserves available to
support private nonbank
deposits
Concepts of Money (Revised Series)
M1 (currency plus demand
deposits) 1/
Bank Credit
Short-term Market Paper
(Monthly average change
in billions)
Large CD's
Nonbank commercial paper
1/ Other than interbank and U.S. Government.
2/ Based on month-end figures.
Includes loans sold to affiliates and branches.
NOTE: All items are based on average of daily figures, except for data on total
loans and investments of commercial banks, commercial paper, and thrift institutions--which are derived from either end-of-month or last Wednesday-of-month
figures. Growth rates for reserve measures in this and subsequent tables are
adjusted to remove the effect of discontinuities from breaks in the series when
reserve requirements are changed.
Prospective developments
(7)
Alternative policy specifications are summarized below for
Committee consideration (with more detailed data shown in the table on
p. 6a).
Alt. A
Alt. B
Alt. C
Alt. D
Range of tolerance
for Feb.-March
M1
6-8
M2
7k-9k
RPD
1 -3%
Federal funds rate
(inter-meeting
range)
4-5
5
k-6-
5-7
4 -6
6 -8-
6-8
5 -7%
k-2%
-%--1
-1-.
4%-5%
5 -6
6-7
Longer-run growth
rates 1/
M1
June'74-June'75
Dec.'74-June'75
Dec.'74-Sept.'75
71
6
8
6%
4
6
6
3
5
6
2%
4%
7k
9k
10%
6%
7
8
6k
6%
7%
6
6k
7
M
N2
2
June'74-June'75
Dec.'74-June'75
Dec.'74-Sept.'75
1/ Figures shown assume staff GNP projection for first three quarters
of 1975, and Federal funds rate behavior as described in the para-
graphs below.
(8) The specifications in the preceding paragraph assume not
only that staff GNP projections for the first three quarters of the year
are realized but also that a more normal relationship is re-established
between the transactions demand for money, narrowly defined, and
-6aAlternative Longer-Run Growth Rates for Key Monetary Aggregates
M1
Alt. A
1975
1975
Jan.
Feb.
Mar.
June
Sept.
1st Q.
2nd Q.
3rd Q.
Feb.
M r.
282.1
283.5
285.4
293.0
301.6
M2
Alt. B Alt. C
282.1
283.4
285.1
290.5
297.0
282.1
283.4
284.9
289.4
295.3
1.5
10.7
11.7
1.1
7.6
9.0
0.8
6.3
8.2
6.0
8.0
5.5
7.2
5.5
6.4
Alt. D
282.1
283,3
284.7
288.3
293.4
5.1
5.9
, I'- ,H
Alt. A Alt. B, Alt. C Alt. D
615.8
615.8
619.2
619.4
623.0
623.5
635.2
637.6
649.9
653.9
Growth Rates
6.7
6.0
5.7
11,5
9.0
7.8
10.2
9.3
13.4
615.8
619.5
624.6
642.6
664.1
7.2
9.9
6.6
7.4
7.0
7.9
Alt. A
1975
Alt. D-
959.4
959.4
965.6
959.4
966.0
959.4
965.8
974.6
1005.7
1040.4
973.5
999.3
1027.3
5.4
6.9
8.3
8.2
12.8
13.8
7.7
10.6
11.2
9,4
10.0
7.2
8.4
9.1
6.4
6.8
8.3
10.7
8.0
9.6
7.9
8.6
7.8
8.2
965.7
972.7
995.5
1020.5
7.4
2
Alt. B Alt. C
Alt. D
Alt. A
Alt. B
Alt. C
Alt. D
708.7
712.8
718.5
738.1
761.3
708.7
712.7
717.3
732.9
750.7
708.7
712.5
716.8
730.3
746.4
708.7
712.4
716.2
727.9
742.1
495.8
495.5
498.8
510.3
524.1
495.8
495.4
498.3
508.4
521.0
495.8
495.6
499.5
513.5
530.6
1st Q.
2nd Q.
3rd Q.
4.2
11.2
13.3
3.6
9.2
10.8
3.2
8.1
9.9
3.0
7.0
8.8
7.9
10.9
12.8
7.2
8.7
9.7
6.9
7.5
8.8
6.6
6.5
7.8
Feb.
-0.5
9.4
-0.7
8.0
-1.0
7.0
-1.2
6.5
6.9
9.6
6.8
7.7
6.4
7.2
6.3
6.4
Jan.
Feb.
Mar.
June
Sept.
495.8
495.3
498.0
506,7
517.8
Growth Rates
1975
Mar.
1/ M 1 is defined as M2 plus CD's.
I
Alt. C
619.1
622.6
633.3
646.4
615.8
Credit Proxy
Alt. A
I
Alt. B
972.2
992.5
1015.1
-7nominal GNP.
In particular a rebound in money demand is anticipated
for the weeks immediately ahead following the unusually large contraction
of recent weeks--an expectation that is supported in some degree by the
early February data.
Thus, M 1 growth is expected to be fairly sub-
stantial under any of the alternatives in the February-March period.
(9)
Of the alternatives shown, alternative A encompasses the
6 per cent annual growth rate for M 1 specified by the Committee at its
last meeting in its longer-run targets for the first half of '75.
This
alternative also shows a 9¾ per cent growth rate for M2, slightly higher
than the rate specified by the Committee last time.
The projected
relationship between M 1 and M2 is changed because a further decline in
market interest rates is now assumed to be necessary if the indicated
M1 growth rate is to be attained by mid-year, and that should result
in larger inflows of consumer-type time and savings deposits.
(10)
Given the January shortfall in M1
and the sharply weaker
economy now projected by the staff for the first and second quarters
of this year, we would expect it to be necessary for the Federal funds
rate to decline to around the middle of a 4-5 per cent range between now
and mid-March if the growth in the aggregates as shown under alternative
A were to be attained.
Some further decline in the funds rate might be
needed by early spring.
(11)
So steep a drop in interest rates would have a very
substantial cumulative impact on the demand for money, narrowly and
broadly defined.
By the second quarter, the staff would expect M 1 growth,
for example, to be at about a 10 per cent annual rate, and to accelerate
further in the third quarter when a sharp recovery in GNP is projected.
-8Thus, over the first nine months of the year, this alternative implies
an 8 per cent annual rate of growth in M1.
If the Committee should wish
to get back on the 6 per cent growth trend after mid-year, a sharp rise
in interest rates would be necessary during the late spring and summer.
(12)
The specifications of alternative B involve attainment
of a 6 per cent rate of growth in M1 by September, rather than by midyear. With the target horizon stretched out, interest rates are likely
to decline more moderately over the near-term, and the later upward
movement is likely to be more delayed and probably less sharp.
The
annual growth rate for M1 over the first half of this year under
this alternative would be around 4½ per cent, while M2 would expand
at about a 7½ per cent rate.
(13)
Alternative B contemplates a further decline in the
Federal funds rate over the next few weeks to about the middle of a
4¾-5¾ per cent range.
Further significant declines in the funds rate
in the spring may not prove necessary, assuming that GNP is no weaker
than projected for the first half of this year and that the sharp
expansion in economic activity projected for the third quarter develops.
(14)
Private short-term credit demands are expected to remain
weak into early spring, but the Treasury is likely to borrow an additional
$15-$18 billion of new cash between now and mid-April.
The provision of
bank reserves and easing of money market conditions needed to sustain
growth in the monetary aggregates, as specified in alternative B, should,
at least over the near-term, permit the new Treasury debt to be absorbed
at declining interest rates, though the reductions may be modest.
The
-93-month bill rate could drop by about ½ percentage point to around
5 per cent between now and the next Committee meeting.
Given the
shift in borrowing demands from private sectors to the Treasury,
private short-term rates may decline more.
Longer-term rates may
show rather modest further declines, however, since corporate and state
and local government demands on bond markets are expected to remain
sizable.
(15)
Alternative C contemplates a smaller reduction in the
funds rate than alternative B and hence a less rapid growth in the
monetary aggregates between now and the end of summer.
Under this
alternative, M1 is indicated to expand at an annual rate of about
5 per cent over the first nine months of the year.
By the time the
year is over, M1 may have grown at near a 6 per cent rate under this
alternative if economic activity in the second half of the year turns
out to be as strong as projected in the Green Book.
(16)
Under alternative C, the funds rate would be expected
to decline to around 6 per cent--the mid-point of the range shown
in paragraph (7)--or a little below, between now and the next Committee
meeting.
Such a decline is probably not much more than the market has
already discounted.
As a result, interest rates may decline little
further over the next few weeks under this alternative.
Moreover,
the weight of Treasury financings could place upward pressure on the
rate structure rather soon.
-10(17)
Under alternative D, which involves money market
conditions in the neighborhood of those prevailing on average in the
period since the last meeting, M 1 would grow at a rate of about 4 per
cent over the first nine months of the year.
If the funds rate was
around the 6½ per cent mid-point of the range shown for that alternative,
market rates would probably rise--possibly sharply in the Treasury
market--in the weeks immediately ahead.
Net inflows of savings to
thrift institutions would not be likely to strengthen from their
recent pace, and might slacken somewhat--which would tend to limit
the extent of recovery in housing.
In general, prospective market
developments under this alternative may have implications for the
projected pattern of economic recovery in the second half of the year.
-11Proposed directive
(18)
Presented below are four alternative formulations for
the operational paragraph of the directive, which are intended to
correspond to the similarly lettered policy alternatives discussed in
the preceding section.
In all four alternatives, it is proposed to
delete the reference to Treasury financing--because the quarterly financing
announced on January 22 has been completed--and the Board's action on
reserve requirements.
Alternative A
To implement this policy, while taking account of the
forthcoming Treasury financing,] developments in domestic and
[DEL:
international financial markets, [DEL:
and
the
Board's
action on
reserve requirments,] the Committee seeks to achieve bank
reserve and money market conditions consistent with more rapid
growth in monetary aggregates over the months ahead than has
occurred in recent months.
Alternative B
To implement this policy, while taking account of [DEL:
the
financing,]
Treasury
forthcoming
developments in domestic and
international financial markets, {DEL:
on
action
Board's
the
and
reserve requirements,] the Committee seeks to achieve bank
reserve and money market conditions consistent with SOMEWHAT
more rapid growth in monetary aggregates over the months ahead
than has occurred in recent months.
-12Alternative C
To implement this policy, while taking account of [DEL:
the
financing,]
Treasury
forthcoming
developments in domestic and
international financial markets, [DEL:
on
action
Board's
the
and
reserve requirements,]the Committee seeks to achieve bank
reserve and money market conditions consistent with
[DEL:
rapid
more
MODERATE growth in monetary aggregates over the months ahead
than hasoccurred
months.]
recent
in
Alternative D
To implement this policy, while taking account of [DEL:
the
financing,]
Treasury
forthcoming
developments in domestic and
international financial markets, [DEL:
and the Board's
on
action
reserve requirements,] the Committee seeks to achieve bank
reserve and money market conditions consistent with[DEL:
rapid
more
MODEST growth in monetary aggregates over the months ahead
months.]
recent
in
occurred
has
than
CHART 1
CONfIDENTIAL (FR)
CLASS In-FOMC
2/14/75
RESERVES AVAILABLE TO SUPPORT
PRIVATE NONBANK DEPOSITS
BILLIONS OF DOLLARS
40
-
-134
I
0
S
1973
D
M
J
1974
S
0
Break In Series Due To Changes In Reserve Requirements
M
1975
J
I
-1
N
1974
D
J
F
1975
CHART 2
CONFIDENTIAL (FR)
CLASS II-FOMC
2/14/75
MONETARY AGGREGATES
NARROW MONEY SUPPLY Ml
1973
1974
BILLIONS OF DOLLARS
1975
F
1974
1975
CHART 3
2/14/75
MONETARY AGGREGATES
ADJUSTED CREDIT PROXY
BILLIONS OF DOLLARS
500
-
500
480
480
440
I
RVES
1973
* Break In Series Due To Changes In Reserve Requirements
!
j
I
BILLIONS OF
1974
1975
2/14/75
CHART 4
MONEY MARKET CONDITIONS AND INTEREST RATES
MONEY MARKET CONDITIONS
PER CENT
14
INTEREST RATES Short-term
PERCENT
INTEREST RATES Long-term
PER CENT
-
11
-
9
FUNDS
-7
BILLIONS OF DOLLARS
--1 q
-5
I IL
1974
1975
1974
1975
1974
1975
3
TABLE
1
CONFIDENTIAL (FR)
CLASS II - FOMC
FEBRUARY 14,
BANK RESERVES
(ACTUAL AND CURRENT PROJECTIONS)
--------
------
- -
- -- RESERVES------ --AVAILABLE------------FOR--- --------
- ----
---
II
RESERVES AVAILABLE FOR
PRIVATE NONBANK DEPOSITS
- ---
-
II
SII------------------NONBORROWED I
II TOTAL
PERIOD
-- - -
RESERVES
ANNUAL RATES OF CHANGE
QUARTERLY:
---- ----1974--1ST OTR.
TR.
2NO
3RD OTR.
4TH QTR.
34,444
3 5,465
II
(34,110)
(34,105)
II
II
II
II
I
ii
II
IIl
II
It
II
II
I
I
5.7
19.1
9.1
0.7
I
MONTHLY:
1974--NOV.
DEC.
36,966
(35,563)
-3.0
!I
II
II
II
6.4
I
1975--JAN.
FEB.
1.4
7.91
JAN.-FEB.
I
II
II
II
II
11
4.6 )
WEEKLY LEVELS-SMILLIONS
I
(4)
35,622
36,17
If
1975--JAN.
FEB.
I
---
- -- - --
REQUIRED RESERVES
II----------------------------------
SEAS ADJ
I NON SEAS ADJ
SEAS ADJ
INON SEAS ADJ I1 RESERVES
------ - --------- ------------- - ---------- - -(1)
I
12)
II
(3)
121
II
MONTHLY LEVELS-$MILLIONSI
II
------------------I
1974--NOV.
I
34,868
3 4,675
II
36,874
34,63,
II
3 4,648
DEC.
36,906
------- -
- --
AGGREGATE RESERVES
1975
I
36,567
(35,466)
1.2
0.8
5.6
SEASONALLY ADJUSTED
PRIVATE
DEMAND
(7)
(8)
20,496
20,507
9,200
9,108
4,967
4,761
2,007
2,272
20,184
1(19891)
9,113
I 9,069)
-1.6
16.0
17.6
34.3
2.8
8.5
(
-7.8)
(
4,970
I 4,9273
2,522
( 1,452)
0.4
2.2
0.1
5.4
20.9
S -16.1 )
GOV'T AND
INTERBANK
16)
34.4
10.0
-25.7 )
CO*S AND
NON DEP
15)
1.3
20.1
8.2
4.2
f
OTHER
TIME DEP
I
-14.7
15.9)
0.4)
2.4 )
I!
JAN.
1
34,758
8
15
22
29
34.347
34,414
34,618
34,359
5
12
34,417
34,121
3 5,410
3 5,083
3 5,672
3 5,903
3 5,325
II
II
II
II
II
I
37,279
36,677
37,141
37,273
36,815
36,718
36,365
36,533
36,679
36,672
36,666
35,972
36,569
35,882
II
FEB.
3 5,058
3 4,050
II
II
I
I
20,306
20,129
20,352
20,243
20,048
9,061
9,102
9,080
9,126
9,146
4,814
4,937
4,995
5,006
4,981
2,521
2,330
2,726
2,654
2,456
19,994
20,030
9,124
9,062
4,918
4,924
2,249
1,851
II
NOTE: DATA SHOWN IN PARENTHESES ARE CURRENT PROJECTIONS. AT THE FOMC MEETING OF JAN. 21, 1975
THE COMMITTEE AGREED ON A RPO RANGE OF 6.25 TO 9.25 PERCENT FOR THE JANUARY-FEBRUARY PERIOD.
TABLE
CONFIDENTIAL (FR)
CLASS II - FOMC
2
FEBRUARY 14,
MONETARY AGGREGATES
(ACTUAL AND CURRENT PROJECTIONS, SEASONALLY ADJUSTED)
S
MONEY SUPPLY
NARROW
I
BROAD
(Ml)
I
(M2)
I
I
PERIOD
(1)
I
I
I
I
ADJUSTED II
U.S.
CREDIT
II
GOVT.
I
PROXY
II DEPOSITS I
(2)
(3)
612.6
613.9
491.2
494.3
II
1975--JAN.
FEB.
281.6
(282.7)
615.4
(618.71
495.8
(495.0)
7.6
( 6.5)
8.2
20.4
6.6
4.3
15.1
21.3
9.2
12.6
12.8
8.6
7.3
9.0
26.3
78.2
17.2
25.9
6.8
2.1
9.5
2.5
7.6
7.6
15.9
11.8
2.9
-9.7
67.4
-9.3
( 4.71
2.9
( 6.41
3.6
(-1.9)
18.3
1 7.0)
13.4
S7.9)
1-2.3)
( 4.7)
(
(12.7)
(10.71
(19.9)
424.0
425.8
427.0
426.7
427.6
331.0
332.5
334.1
334.1
334.7
93.1
93.3
92.9
92.7
92.8
6.2
8.1
7.4
7.6
7.3
427.9
429.0
334.8
335.8
93.1
93.2
6.8
6.5
29
494.9
495.6
496.5
495.9
495.1
5 PI
12 PEI
281.4
282.5
616.1
618.3
494.3
494.5
---------
1
34.6
(5.2)
I
OI
0.0
0.1
1.9
1.6
0.1
II
I
NOTE:
0.1
0.2
II
II
II
614.7
614.0
615.7
616.0
615.6
I
I
I
0.8)
283.7
281.5
281.6
282.0
280.9
1
22
- -------
92.9
(93.3)
9.3
7.7
4.6
6.8
---------- I
----
333.8
(336.0)
426.8
(429.3)
0.7
( 0.2)
5.5
6.5
1.6
4.3
WEEKLY LEVELS- -$ILLIONS
---
7.6
8.4
414.9
420.4
1.9
I
JAN.-FEB.
FEB.
85.5
90.3
4.6
I
1975--JAN.
FEB.
15
329.3
330.1
(6)
I
MONTHLY
--1974--NOV.
DEC.
8
(8)
(5)
II
PERCENT ANNUAL GROWTH
-------- ---------QUARTERLY
--------1974--1ST QTR.
2NO OTR.
3RD QTR.
4TH QTR.
JAN.
NONDEPOSIT
I SOURCES OF
I
FUNDS
(7)
(4)
II
263.3
283.8
I
II
I
MONTHLY LEVELS-SBILLIONSI
--------------------I
1974--NOV.
DEC,
I
II
TIME AND SAVINGS DEPOSITS
I
OTHER
I
TOTAL
I THAN CD S I
CD S
DATA SHOWN IN PARENTHESES ARE CURRENT
---------
---------
- ---- - - ----
PROJECTIONS.
- -- --
- - - ----------
P PE -------
PRELIMINARY
PARTIALLY ESTIMATED
--- - -- - - - - ---- -
1975
CONFIDENTIAL (FR)
CLASS II - FOMC
TABLE
FEBRUARY 14, 1975
3
RESERVE EFFECT OF
OPEN MARKET OPERATIONS AND OTHER RESERVE FACTORS
(Millions of dollars, not seasonally adjusted)
Open Market Operations 1/
RP's
Coupon Agency
Bills
Net 3/
Issues Isques
& Accept.
(4)
(3)
(2)
(1)
Total
(5)
Daily Average Reserve Effects 2/
Other 4/
A Member
Open Market
Factors
Bank Borrowing
Operations
(8)
(7)
(6)
4
in reserve categories
req. res. against available res. 5/
U.S.G. and interb. (6+)(7)+(8)-(q)
(10)
(9)
/ Target
available
reserves 5/
11
Monthly
1974 --
1975 --
898
862
-594
125
-176
726
235
191
-3,760
2,225
549
-2,011
3,322
322
1,601
141
-32
309
39
-60
-901
-464
99
465
-450
-67
544
166
74
375
180
375
Oct.
Nov.
Dec.
-1,727
1,217
729
212
280
331
360
-243
981
-976
-1,970
2,739
393
-633
327
2,963
-1,494
-507
-583
1,990
201
-2,376
177
-183
66
-314
204
-62
315
395
450
Jan.
Feb.
Mar.
-1,102
421
-14
1,082
388
-636
-5,269
3,987
-4,715
4,043
532
-243
-411
-425
July
Aug.
Sept.
965
-670
Weekly
1974 --
1975 --
1/
2/
3/
4/
5/
-
371
--
114
54
378
-722
63
-172
406
255
4
11
554
56
-
18
25
313
399
-280
360
--
1,09]
757
1,764
1,436
432
2,612
170
-156
Jan.
1
8
15
22
29
-85
-309
-371
-156
12
406
-
-14
--
-3,323
-3,069
2,492
4,601
-3,119
-3,409
-3,393
2,526
4,445
-3,107
-103
-1,918
-863
664
314
-101
-249
296
-14
-451
947
1,934p
46
1, 7p
77
-5 p
-822p
293
84p
311p
-158p
8
-3 1p
-38
-2,271
-689
-66p
-299
-1,091
--
420p
5
12
19
26
-46
Feb.
-2,608
450
-317P
589p
23
1p
-578p
-249p
3,612
2,521
-1,899
-7
937p
60p
-1,029p
Dec.
--
-133
-2,373
auctions.
Represents change in System's portfolio from end-of-period to end-of-period; includes redemptions in regular bill
Represents change in daily average level for preceding period.
Includes matched sale-purchase transactions as well as RP's.
Sum of changes in vault cash, currency in circulation, Treasury operations, F.R. float, gold and foreign accounts, and other F.R. accounts.
Target change for Jan. and Feb. reflects the target adopted at the Jan. 21, 1975 FOMC meeting.
Reserves to support private nonbank deposits.
Target change for previous months reflects the bluebook patterns that are consistent with target ranges that were adopted during the month.
CONFIDENTIAL (FR)
CLASS II - FOMC
TABLE
4
FEBRUARY 14, 1975
SECURITY DEALER POSITIONS AND BANK POSITIONS
Millions of dollars
U.S. Govt. Security
Dealer Positions
Period
Bills
(1)
1973 -- High
Coupon Issues
(2)
Member Bank Reserve Positions
Dealer Positions
Corporate
Bonds
Municipal
Bonds
Excess**
Reserves
Borrowing at FRB**
Seasonal
Total
(b)
Basic Reserve Deficit
38 Others
8 New York
to)
3,796
897
1,299
-301
631
-240
2,561
688
-5,243
-1,831
-10,661
3,678
-289
2,203
-309
628
-168
3,906
647
-7,870
-2,447
-12,826
Feb.
Mar.
3,102
2,436
1,986
540
1,619
583
162
184
134
1,051
1,162
1,314
-4,753
-5,262
-5,030
-10,893
-10,769
-11,058
Apr.
May
June
1,435
408
580
99
85
9
182
178
204
1,736
2,590
3,020
-3,952
-3,171
-4,445
-11,603
July
Aug.
Sept.
457
1,758
2,309
-214
398
552
162
107
180
3,075
3,337
3,282
-3,522
-4,231
-4,235
- 9,555
- 9,224
- 8,250
Oct.
Nov.
Dec.
2,174
2,900
2,985
654
1,608
1,836
197
205
258
1,813
1,252
727
-4,602
-6,322
-5,960
- 8,689
- 9,715
1975 --
Jan.
*2,501
*2,050
-5,378
- 9,744
1974 --
Dec.
2,975
2,965
3,678
2,942
1,630
-5,400
-7,245
-6,704
-5,243
- 9,889
1
8
15
22
29
2,234
2,487
3,351
*1,586
*2,308
2,507
5
12
19
26
*2,739
*3,555
Low
1974 -- High
Low
1974 -- Jan.
1975 -- Jan.
Feb.
NOTE:
1,678
1,714
1,680
7
1 5p
283
-159
217
429
39 8
p
1,070
648
818
662
2,036
*1,619
*1,615
577
8
17 p
-13p
243p
185p
561
2
31 p
608p
4
59 p
14 3
p
*2,178
*1,863
380p
102p
97p
90p
2,845
-4,771
-5,218
-5,633
- 4,048
- 6,046
- 9,091
- 9,920
-10,169
-10,614
-10,525
-10,129
- 9,016
-10,332
-10,677
-5,853
-4,713
- 9,616
-5,628p
2
-7, 35p
- 8,663p
- 8,504
- 9,310p
Government security dealer trading positions are on a commitment basis. Trading positions, which exclude Treasury bills financed by repurchase
agreements maturing in 16 days or more, are indicators of dealer holdings available for sale over the near-term. Other security dealer positions
are debt issues still in syndicate, excluding trading positions. The basic reserve deficit is excess reserves less borrowing at Federal Reserve
less net Federal funds purchases. Weekly data are daily averages for statement weeks, except for corporate and municipal issues in syndicate
which are Friday figures.
*
STRICTLY CONFIDENTIAL
** Monthly averages for excess reserves and borrowings are weighted averages of statement week figures.
STRICTLY
CONFIDENTIAL (FR)
5
TABLE
FEBRUARY 14, 1975
SELECTED INTEREST RATES
Per Cent
Lone-Term
Rhort-Trm
Treabury Bills
Period
Federal Funds
90-Day
1-vear
(1)
Shr-Tr
90-119 Day
Commercial
Paper
Aaa Utility
New
Recently
Issue
Offered
CD's New Issue-NYC
90-119 Day
60-89 Day
U.S. Government
(10-yr. Constant
Maturity)
(10)
FNMA
Auction
Yields
(11)
(6)
(7)
(8)
10.50
5.38
10.75
5.50
8.52
7.29
8.30
7.26
5.59
4.99
7.54
6.42
9.37
7.69
10.61
8.05
10.52
8.14
7.15
5.16
8.14
6.93
10.59
8.21
8.12
8.46
8.21
8.23
8.44
5.22
8.71
5.41
6.99
6.96
7.21
8.95
9.13
9.40
5.73
6.02
6.13
7.51
7.58
7.54
9.07
9.41
9.54
(5)
(4)
Municipal
Bond Buyer
(9)
1973--High
Low
10.84
5.61
10.50
1974--High
Low
13.55
8.45
12.25
12.25
8.00
12.00
7.88
1974-Jan.
9.65
8.97
9.35
8.86
8.00
8.64
9.05
8.09
8.69
8.83
Feb.
Mar.
Apr.
May
June
10.51
11.31
11.93
9.92
10.82
11.18
9.81
9.78
10.83
11.06
10.90
10.88
8.99
9.2'.
9.38
July
Aug.
Sept.
12.92
12.61
11.34
11.93
11.79
11.36
11.83
11.69
11.19
11.83
11.91
11.38
10.20
10.07
10.38
10.04
10.19
10.30
6.68
6.69
6.76
7.81
8.04
8.04
9.84
10.25
Oct.
Nov.
Dec.
10.06
9.45
8.53
7.46
7.47
7.15
9.55
8.95
9.33
8.72
8.84
10.16
9.21
9.53
10.23
9.34
9.56
6.57
6.61
7.05
7.90
7.68
7.40
10.22
9.18
9.35
8.78
9.00
1975--Jan.
7.13
6.26
7.39
7.43
7.45
9.36p
9.45p
6.82
7.39
9.25
4
11
18
25
9.02
8.86
8.72
8.45
7.45
7.28
9.22
9.00
9.13
9.25
9.25
8.88
8.88
9.00
9.13
8.75
8.75
8.75
9.50
9.59
9.51
9.39
9.57
9.59
6.89
7.15
7.08
-
9.64
7.08
7.61
7.37
7.24
7.37
9.61
6.99
7.20
6.95
6.63
6.61
1
8
15
22
29
7.35
7.70
7.22
7.17
6.99
7.02
6.68
6.63
6.32
5.62
6.69
6.56
6.44
6.33
5.91
9.34
8.43
7.73
7.18
6.55
9.00
7.88
7.25
6.75
6.25
9.00
7.75
7.38
6.63
6.50
-
9.67
7.08
6.99
6.90
6.59
6.54
7.37
7.32
7.38
7.44
7.41
9.47
6.34
6.27
7.31
1974--Dec.
1975--Jan.
5.63
7.08
1974--Feb.
5
12
19
26
6.46
6.28
5.62
5.72
5.65
5.58
6.60
6.38
Daily-Feb.
6
13
6.21
6.31p
5.60
5.62
5.45
5.60
6.38
6.38
NOTE:
7.88
7.97
8.56
9.62
9.38
9.45
9.00
8.89
9.02p
6.25
6.25
6.00
6.00
9.45
9.55
9.47
9.21
9.12
9.16p
5.20
8.43
8.48
8.53
10.58
9.87
9.53
9.52
9.37
9.12
8.98
7.32p
7.28
n.a.
_
-I
~-I
I
~L---
~1-
_-
-I
Weekly data for colums 1 to 4 are statement week averages o daily data. Columns 5 and 6 are one-day Wednesday quotes. For columns 7, 8, and 10
the weekly date is the mid-point of the calendar week over which data are averaged. Column 9 is a one-day quote for Thursday following the end of
the statement week. Column 11 gives FNMA auction data for the Monday preceeding the end of the statement week. The FNMA auction yield is the
average yield in bi-weekly auction for short-term forward commitments for Government underwritten mortgages.
February
Appendix Table 1
14,
1975
RESERVES AND MONETARY VARIABLES
MONEY STOCK
RESERVES
Period
Total
1
BANK CREDIT
MEASURES
Available
to
NonSupport
borrowed Private
Deposits
M1
M3
Adjusted
Credit
Proxy
5
6
7
(Per cent annual rates of growth)
Total
Loans
and
Investments
8
Total
Time
Te
Tme
Other
Than
CD's
Tr
Thrift
Insttution
Deposits
9
10
11
CD's
Nondeposit
Funds
U.S.
Gov't.
Demand
Funs
2
3
10.6
7.8
7.1
7.7
7.2
9.1
10.0
9.3
7.2
8.7
6.1
4.7
11.1
8.8
7.4
13.1
8.7
6.7
11.3
10.4
10.2
14.6
13.5
8.3
15.7
16.2
15.3
13.5
11.4
9.7
16.7
8.5
5.6
10.4
19.9
26.5
-0.6
2.3
1.8
-0.2
-1.7
-2.0
Semi-annually:
Ist Half 1973
2nd Half 1973
6.4
8.9
1.4
13.1
9.8
7.8
7.4
4.7
9.1
8.3
9.5
7.5
13.5
6.8
16.6
9.6
19.8
11.4
10.6
11.6
10.4
6.3
16.7
3.2
0.7
1.6
0.8
-2.5
1st Half 1974
2nd Half 1974
10.6
6.2
1.0
20.3
12.4
4.9
6.3
3.1
8.7
5.8
7.7
5.5
14.5
5.4
15.0
1.4
18.6
11.0
10.9
8.1
5.9
5.1
17.5
9.0
1.8
--
1.4
-3.4
Quarterly:
1st Qtr. 1974
2nd Qtr. 1974
3rd Qtr. 1974
4th Qtr. 1974
1.3
20.1
8.2
4.2
1.2
0.8
5.6
34.4
5.7
19.1
9.1
0.7
5.5
7.0
1.6
4.6
9.3
7.9
4.5
7.0
8.8
6.6
4.0
6.9
8.2
20.4
6.6
4.3
17.5
12.0
5.6
-2.8
15.1
21.3
9.1
12.6
12.8
8.8
7.1
9.0
7.9
3.9
3.1
6.9
4.2
13.3
3.5
5.5
0.9
0.9
0.2
-0.2
-0.7
2.1
1.0
-4.4
32.6
-23.6
-4.7
31.1
21.2
7.1
21.7
-4.3
7.1
-1.8
-1.6
16.0
42.6
-29.2
-9.2
17.2
-7.7
-7.1
13.1
-5.9
9.7
49.6
17.6
34.3
5.9
2.9
8.2
19.1
21.5
15.7
8.6
10.8
7.8
-1.3
-3.0
6.4
-2.7
9.7
9.2
6.1
4.3
10.4
2.1
0.9
1.7
4.7
6.8
2.1
6.9
11.1
9.7
8.0
4.5
11.2
5.2
5.0
3.2
8.5
9.7
2.5
7.2
9.5
9.4
7.3
3.4
8.8
4.9
3.9
3.1
7.2
8. 5
5.0
12.3
2.9
9.2
29.6
16.9
13.6
9.2
6.4
3.9
-5.2
7.6
16.5
17.0
18.4
17.9
12.1
5.7
16.0
9.4
-8.6
-4.5
-12.8
21.4
16.2
7.3
26.6
18.0
18.0
13.3
7.1
6.8
13.5
7.6
16.2
15.6
12.6
9.7
9.3
5.0
11.8
7.9
8.6
4.5
11,9
12.2
2.9
7.8
6.3
9.6
5.8
1.5
4.3
4.7
1.8
2.9
4.3
7.1
9.2
2.6
1.8
-0.2
5.9
4.6
2.8
2.3
0.2
1.0
1.4
-0.7
4.8
-0.1
0.4
0.6
0.6
0.7
-0.4
0.8
-0.2
-0.4
-0.7
-0.3
0.8
1.2
-2.9
1.0
1.4
1.0
-0.3
-1.1
2.0
0.1
-2.6
0.9
-2.7
10.0
20.9
1.4
-9.3
2.9
5.4
3.6
8.2
18.0
13.5
9.9
2.6
-0.8
-1.2
Annually:
1972
1973
1974
4
M2
OTHER
MEASURES
12
13
14
(Dollar change in billions)
Monthly:
1974--Jan.
Feb.
Mar.
Apr.
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
1975--Jan.
NOTES:
p
Reserve requirements on Eurodollar borrowings are included beginning October 16, 1969, and requirements on bank-related commercial paper are included
beginning October 1, 1970.
1/ Growth rates are based on estimated monthly average levels derived by averaging end of current month and end of previous month reported data.
p - Preliminary.
FR 712-S
February 14, 1975
Appendix Table 2
RESERVES AND MONETARY VARIABLES
SEASONALLY ADJUSTED, BILLIONS OF DOLLARS
Period
Total
Available
to
to
Non
rowed Support
Pvt
M1
Total
M2
MEASURES
M3
Pvt
Loans
Loans
Proxy
Invest
Total
Time
Time
INonOther
Than
CD's
Thrift
InstN
n
tuti
U S.
CD's
deposit
Gov't
Funds
Demand
14
15
D
13
10
11
12
559.0
634.6
313.8
364.5
269.9
300.7
297.5
322.8
43.9
63.8
4.3
6.6
5.6
3.9
453.3
454.4
457.9
643.3
652.4
662.4
371.0
376.0
378.3
304.6
307.8
310.3
324.9
326.6
329.2
66.4
68.2
68.0
6.5
6.9
7.5
5.1
2.2
3.2
920.2
922.8
929.6
469.2
475.8
481.2
672.3
679.1
682.9
386.7
392.5
398.4
312.7
314.0
317.1
330.8
331.2
332.4
73.9
78.5
81.3
8.1
8.8
8.4
4.6
5.6
5.3
599.7
602.2
603.8
933.4
936.4
938.8
484.9
487.5
489.1
692.0
697.3
692.3
402.8
405.2
407.5
319.2
321.5
322.7
333.7
334.2
335.0
83,6
83.8
84.8
9.2
9.0
8.6
4.2
6.2
6.3
215.7
216.5
216,6
608.1
613.0
614.3
944.4
951.1
955.1
488.3
491.2
494.3
692.3
693.4
686.0
412.1
414.7
420.3
325.9
329.2
330.0
336.2
338.2
340.8
86.2
85.5
90.3
7.9
7.6
8.4
3.7
4 6
1. 9
282.1
214.1
615.8
959.4
495.8
690.7
426.6
333.7
343.6
92.9
7.6
0.7
34,919
34,424
34,542
3 4 66
, b
286.4
285.2
283.9
283.2
218.6
217.6
216.1
215.5
615.3
614.8
614.1
613.9
-----
493.5
494.7
495.9
493.1
-----
415 5
418.1
420.4
422.4
328.9
329.6
330.1
330,7
-----
86.7
88.5
90.2
91.7
7.6
8.1
8.9
8.6
3.6
3.4
3.3
0.3
36,718
36,365
36,533
36,679
34,758
34,347
34,414
34,618
284.3
282.0
282.1
282.5
216.5
214.2
214.1
214.2
615.1
614.3
616.1
616.4
----
494.9
495.6
496.5
495.9
-----
423.9
425.7
426.9
426.6
36,672
34,359
281.4
213.1
616.0
--
495.1
--
427.4
330.8
332.3
334.0
333.9
334.6
-----
93.1
93.3
92.9
92.7
92.8
8.2
8.1
7.4
7.6
7.3
-0.1
1.9
1.6
0.1
427.8
334.6
-
93.1
6.8
0.1
2
3
4
5
6
7
8
31,456
35,164
30,406
33,867
29,092
32,965
255.8
271.5
198.9
209.9
525.7
572.2
823.3
895.0
406.4
448.7
Monthly:
1974--Jan.
Feb.
Mar.
35,820
35,115
34,978
34,769
33,924
33,664
32,824
32,904
33,130
270.9
273.1
275.2
208.9
210.4
211.9
575.5
580.9
585.5
900.4
907.5
914.6
Apr.
May
June
35,884
36,519
36,736
34,147
33,929
33,729
33,658
34,260
34,708
276.6
277.6
280.0
212.8
213.3
215.4
589.4
591.6
597.1
July
Aug.
Sept.
37,399
37,266
37,282
34,098
33,930
34,000
34,958
35,272
35,296
280.5
280.7
281.1
215.7
215.3
215.3
Oct.
Nov.
Dec.
36,857
36,874
36,906
35,041
35,622
36,173
34,889
34,868
34,634
282.2
283.8
284.3
36,966
36,567
34,444
4
11
18
25
37,179
36,565
36,817
36,863
36,109
35,917
35,999
36,201
1975--Jan. 1
p
15p
22p
37,279
36,677
37,141
37,273
29p
36,815
(
and
ments
Annually:
1972
Dec.
Dec.
1973
1975--Jan.
Total
Adj
Ad
Credit
Dep
Deposits
1
P
OTHER
BANK CREDIT
MONEY STOCK MEASURES
RESERVES
9
Weekly:
Dec.
8
Feb.
NOTES.
/
5p
36,666
36,569
34,417
282.0
213.8
616.6
-
494.3
-
Estimated monthly average levels derived by averaging end of current month and end of previous month rep rted data.
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 Eurodollar borrowings of U. S. banks.
Weekly data are daily averages for statement weeks. Monthly data are daily
FR 712 T
averages except for nonbank commercial paper figures which are foi last day of month.
Weekly data are not available for M3,
total loans and investment
and thrift institution deposits.
p - Preliminary.
Appendix Table III
Growth Rate in Money Supply
(Per cent change at an annual rate)
M
Q
M
I
3.4
6.8
7.3
II
11.3
7.3
III
0.6
IV
M
Q
9.1
8.6
10.3
10.6
8.6
10.3
8.9
5.5
5.6
7.7
5.2
7.5
8.7
5.0
10.8
8.9
9.8
7.9
I
5.5
5.8
9.3
9.6
8.8
9.1
II
7.0
7.3
7.9
8.3
6.6
7.4
1.6
3.9
4.5
6.2
4.0
5.2
4.6
3.7
7.0
6.5
6.9
6.0
1973
1974
III
IV
Q
M = Annual rates of growth calculated from average levels in the
final months of the quarters.
Q = Annual rate calculated from average levels in all three months
of the quarters.
Appendix Table IV
Growth Rates in
Money Supply for Alternatives
MI
M
M2
Q
M
A
M
M
QM
8.2
7.0
Q
Alt. A
1975
I
II
III
1.5
0.4
5.4
6.7
10.7
9.3
11.5
10.5
12.8
11.7
11.7
11.6
13.4
12.8
13.8
13.5
Alt. B
I
1.0
0.1
6.0
5.1
7.7
6.7
II
7.7
7.0
9.0
8.5
10.6
10.0
9.0
8.7
10.2
9.9
11.2
11.1
1975
III
Alt.
C
I
0.8
0.1
4.9
7.4
6.6
II
6.3
6.0
7.5
9.4
9.0
8.2
7.8
8.9
10.0
9.9
4.8
7.2
1975
III
Alt. D
1975
I
0.6
II
5.1
4.9
6.7
8.4
7.1
6.7
7.9
9.1
III
M = Annual rates of growth calculated from average levels in last months
of the quarters.
Q = Annual rates calculated from average levels in all three months of
the quarters.
Appendix Table V
Comparison of Old and Revised Money Stock
Growth Rates
(Per Cent Annual Rates of Change)
M1
M2
Old
Revised
Old
Annual:
1974
4.5
4.7
7.3
Half-year:
1974 I
II
6.0
2.9
6.3
3.1
Quarterly:
1974 I
II
III
IV
5.5
6.5
1.6
4.3
-2.7
9.7
9.2
6.1
4.3
9.1
2.1
1.3
1.3
3.8
6.8
2.1
Monthly:
1974 Jan
Feb
Mar
April
May
June
July
Aug
Sept
Oct
Nov
Dec
M3
Revised
Old
Revised
7.4
6.7
6.7
8.6
5.8
8.7
5.8
7.6
5.5
7.7
5.5
5.5
7.0
1.6
4.6
9.3
7.7
4.6
6.8
9.3
7.9
4.5
7.0
8.8
6.4
4.0
6.9
8.8
6.6
4.0
6.9
-2.7
9.7
9.2
6.1
4.3
10.4
2.1
0.9
1.7
4.7
6.8
2.1
6.9
11.1
9.7
8.0
4.3
10.5
5.4
5.2
3.2
8.3
9.5
2.5
6.9
11.1
9.7
8.0
4.3
11.2
5.2
5.0
3.2
8.5
9.7
2.5
7.2
9.3
9.5
7.3
3.3
8.5
5.0
4.1
2.9
6.9
8.6
4.9
7.2
9.4
9.4
7.3
3.4
8.8
4.9
3.9
3.1
7.2
8.5
5.0
@FedFRASER