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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. January 5, 1968. CONFIDENTIAL (FR) MONEY MARKET AND RESERVE RELATIONSHIPS Recent developments Money market conditions have become somewhat tauter since the last meeting of the Committee. However, credit market psychology has been successively buoyed by first the balance of payments program and then, more importantly, by rumors relating to peace negotiations; and as a result bill yields have recently declined and prices in bond markets have risen rather sharply. Nonborrowed reserves declined in December, on average, after seasonal adjustment, and as a result member banks have become more active at the discount window and the Federal funds rate has risen to around 4-5/8 per cent on average. Borrowings rose to $185 million in the week ending December 20, and then reached particularly high levels during the past two statement weeks, when they averaged $420 million. But such a high level was occasioned by a skewed distribution of and wide swings in reserve funds that resulted in high excess reserves during the Christmas holiday week and over the year-end. These swings were accompanied by wide variations in the Federal funds rate, which touched 5 per cent on the day before the year end statement date. Free reserves during the past three statement weeks have averaged $80 million, fluctuating between $50 and $115 million. During the first half of December and in earlier months of the fourth quarter such reserves had averaged over $200 million. The somewhat increased pressure on the banking system from open market operations was supplemented by the announcement in late December FINANCIAL MARKET RELATIONSHIPS IN PERSPECTIVE (Monthly averages and, where available, weekly averages of daily figures) Flo of Reserves. Bank Credit and Money Indicators Bon Yields Mon. v .arket Free BorrowFederal 3-month Corporate Munici- NonTotal Bank Time si ReCredit Supy borrcwed pal U.S. New Funds Treaseserves ings 2 Proxy (Aaa) Reserves serves Issues ury Gov't. Rate (In millions of dollars) Bill (20 r.) (Aaa) I of dollars) dollars) billions of , (In billions -- lq,, (Seasonally Adjusted) Period 1966--Dec. -196 529 5.39 4.96 4.76 5.73 3.79 - 1967--Jan. - 13 - 16 + 0.4 + 0.3 + 1.3 59 476 4.87 4.72 4.51 5.43 3.50 +475 +359 + 3.3 - 0.1 + 2.2 Feb. Mar. 42 172 366 196 4.99 4.50 4.56 4.26 4.61 4.56 5.18 5.31 3.38 3.47 +325 +555 +218 +415 + 3.3 + 3.0 + 1.2 + 1.6 + 2.6 + 2.6 Apr. May 199 275 150 94 4.03 3.94 3.84 3.60 4.64 4.90 5.38 5.62 3.50 3.71 + 92 + 96 + 49 8 + 2.1 + 1.2 - 0.3 + 1.6 + 2.0 + 1.9 June July Aug. 257 311 270 88 132 86 3.97 3.78 3.88 3.53 4.20 4.26 4.99 5.01 5.12 5.79 5.78 5.86** 3.80 3.86 3.78 + 95 +307 +291 +164 +223 +269 + 2.0 + 3.2 + 3.7 + 1.7 + 1.7 + 1.2 + + L.2 + 2.5 Sept. 252 82 3.99 4.42 5.16 5.85** 3.81 + 96 +193 + 2.3 + 0.1 + 1.7 Oct. Nov. 212 223 141 124 3.87 4.14 4.55 4.72 5.36 5.66 6.08 6.50 3.88 3.99 +250 +221 +311 +155 + 2.7 + 1.9 + 1.0 + 1.1 + 1.9 + 1.8 Dec. p 149 185 4.49 4.96 5.59 6.51 4.15 -287 -151 - 0.1 + 0.2 + 1.3 29 p 255 119 4.47 4.88 5.63 6.49 4.03 - 0.6 - 0.1 + 0.2 6 p 210 87 4.30 4.95 5.64 6.55** 4.15 + 0.7 + 0.3 + 0.6 13 p 20 p 27 p 214 59 113 121 185 345 4.53 4.48 4.63 4.91 4.99 4.94 5.62 5.57 5.55 6.42** --- 4.15 4.15 4.15 - 0.8 - 0.5 + 0.5 - 0.5 - 0.1 + 1.2 + 0.4 - 0.2 - 0.4 3 p 71 495 4.56 Year 1967 p First Half 1967 Second Half 1967p 195 153 236 173 222 123 4.20 4.38 4.02 5.01 Aver 4.30 4.09 4.52 Recent variations in growth Mar. 29-June 28 Jun. 28-Aug. 16 3 Aug. 16-Jan. 245 280 214 110 123 123 4.00 3.85 4.10 3.66 4.17 4.64 1967--Nov. Dec. 1968--Jan. 5.53 es 5.01 4.70 5.32 6.32 n.a. 5.77 5.45 6.10 3.74 3.56 3.91 4.83 5.05 5.41 5.63 5.83 6.15 3.68 3.82 p/3.95 + 1.3 + 1.6 Annual rates of increase 3/ + 6.5 +11.7 + 9.8 +11.5 + 6.8 +12.1 +10.7 +15.0 + 6.0 +10.6 + 8.5 + 7.5 +18.8 +19.4 + 8.3 I/ 2/ 3/ Includes issues carrying 5-year and 10-vear call protection; ** issues carry a 5-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. p - Preliminary. Janurv 5 1968. + 6.9 +11.8 + 5.9 - 0.1 +15.8 +17.3 +13.1 +14.3 +18.4 + 9.3 CONFIDENTIAL (FR) -2- January 5, 1968. of a 1/2 percentage point increase in reserves required against demand deposits over $5 million. The new requirement was made effective in the statement weeks beginning January 11 and 18 for reserve city and country banks respectively. Reaction in short- and long-term credit markets to the recent policy moves has been relatively mild. The 3-month bill rate rose about 1/8 of a percentage point to over 5 per cent following the last FOMC meeting and in the wake of the announced increase in reserve requirements. During the past two days, however, rumors of peace negotiations led to a decline in the yield, which was quoted 4.96 per cent bid at the close of business Friday. Longer-term bill rates have dropped below levels at the time of the previous meeting. As noted earlier, credit markets responded favorably to the new balance of payments program, interpreting it as reducing the need for intensification of monetary restraint. Not only did longer-term bills become somewhat more attractive, relatively, but there was also a rise in bond prices, followed by another boost in the wake of peace rumors. Earlier, bond markets had shown virtually no reaction to NovemberDecember monetary policy moves, partly because of the technical position of the market and of the lull during the holiday season in new issues coming to market. But also it appears that a shift toward monetary restraint, at least a mild one, had already been largely discounted by market participants; and some increased investor interest in bonds is reappearing at current rate levels. While the rise in shortest-term bill yields and rates on other money market paper, such as bankers' acceptances, was relatively modest, CONFIDENTIAL (FR) -3- January 5, 1968. these rates were approaching critical levels in relation to the 5-1/2 per cent ceiling rate on large negotiable CD's. In December the run- off in CD's was around $770 million, or about 13 per cent of the total maturing during the month. The relatively high level of market interest rates also made other time and savings deposits of banks less attractive. As a result, total time and savings deposits of banks increased by an 8-1/2 per cent annual rate in December, the slowest monthly increase for the year. While growth in time deposits slowed, outstanding demand deposits at banks declined rather sharply. The bulk of the decline was in U.S. Government deposits, but private demand deposits also dropped slightly as banks liquidated a considerable amount of U.S. Government securities in accommodating enlarged business loan demands. The money supply, which had increased more or less steadily from spring to early November, showed only a slight increase on average during December as an accelerated growth in currency offset the decline in private demand deposits. The decline in demand deposits in December was sufficient to offset the restrained growth in time deposits, and the bank credit proxy showed no change for the month on average. Moreover, allowance for the reduction in head office liabilities to foreign branches would make for a 1 percentage point decline in the proxy.1/ We do not have seasonally adjusted figures for such Euro-dollar borrowings in view of the limited observations so far available, but it would appear that a good part of the decline in borrowings abroad last month was seasonal. January 5, 1968. -4- CONFIDENTIAL (FR) Percentage increases in certain key monetary variables for the 1965-67 period are shown below. I Annual By half years 1966 1965 II I |II 1967 I II 1965 1966 1967 Total reserves 7.0 3.2 4.7 -2.3 10.7 8.5 5.2 1.2 9.8 Nonborrowed reserves 4.5 3.9 2.8 -1.3 15.0 7.5 4.2 0.8 11.5 Bank credit proxy 10.2 7.6 7.1 0.3 12.1 10.6 9.1 3.7 11.7 Time and savings dpts. 15.2 15.7 10.8 6.5 17.3 13.1 16.0 8.8 15.8 3.0 6.3 4.6 -0.2 4.7 2.2 Money supply 6.8 6.0 Prospective developments Maintenance of the money market conditions that have evolved in conjunction with open market policy and the announced reserve requirement increase during recent weeks would appear to involve free reserves in a zero to $100 million range; member bank borrowings generally in a $150 - $300 million range; the Federal funds rate generally above the discount rate and most frequently in a 4-5/8--4-3/4 per cent area; and a 3-month Treasury bill rate in a 4.90 - 5.25 per cent range. Prospects with respect to the Euro-dollar market are uncertain in view of questions as to the timing and extent of impact of the U.S. balance of payments program. But if Euro-dollars become more costly and if the December attrition in Euro-dollar funds obtained by banks continues, these banks are likely to become more aggressive in Federal funds and CD markets, pushing yields up in these areas toward the top of the above ranges. 6.5 CONFIDENTIAL (FR) January 5, 1968. -5- The banks may also become more willing borrowers at the discount window, which would tend to push borrowings toward the upper end of the range specified. The above set of money market conditions is likely to be associated in January with a resumption of growth in total and nonborrowed reserves, and in bank credit expansion perhaps to a 6-10 per cent, annual rate, range as measured by the proxy. The principal factor contributing to so sizable a rebound in bank credit will be the reserves supplied to support bank underwriting of the $2.5 billion tax bills recently announced by the Treasury for payment on January 15 through full crediting to tax and loan accounts. As banks distribute these bills during the second half of the month, this will contribute to a lower bank credit expansion as measured from the end of December to the end of January. A tendency for bill rates to rise under the weight of tax bill distribution may be moderated somewhat both by current relatively light dealer positions and by the fact that the System will be using the reserve requirement increase rather than bill sales to help mop up $550 million of seasonally redundent reserves in January. A somewhat wider range than usual for the projection of the proxy has been given in view of the many uncertainties surrounding bank credit, generated not only by the state of the Euro-dollar market but also by the narrowing of the margin between domestic market interest rates and the ceiling rate on time deposits at banks. If the addition to bill supply or very large business loan demands should drive the bill rate to near the upper end of its projected range, it is likely that banks' CONFIDENTIAL (FR) -6- January 5, 1968. ability to compete for CD's would be so limited as to result in a further net decline in outstanding CD's. If, on the other hand, the bill rate were to stay near the middle of the range, banks probably would be able at least to replace all of the $5.9 billion of CD's maturing in January if they so wished. Total time and savings deposits are expected to rise in only a 2 - 6 per cent annual rate range during January. Not only are CD's expected to provide little push to the total, but the net inflow of other time and savings deposits is likely to be no more than the reduced December pace, and may slow further. U.S. Government deposits are expected to rise by about $1.5 billion on average in January, largely because of the cash financing. Private demand deposits, and the money stock, will probably show little change on average in the month. There has apparently been a moderation since early November in the enlarged public demand for money that had been evident throughout the first 10 months of last year. Money holdings of consumers and, to a degree, of corporations rose in reflection of increased liquidity demands following the earlier period of strong monetary restraint. Recently, with liquidity positions improving, and given high level of interest rates, demands for precautionary balances have apparently been reduced. The projected bank credit expansion could be accompanied by some withdrawal of banks from the municipal and Agency markets. This will depend in large part on the strength of business loan demands. Such demands were very large in December, only partly explainable by a January 5, 1968. CONFIDENTIAL (FR) -7- number of special circumstances. Loan growth in January is likely to be at a slower pace than in the previous month, but may remain fairly sizable as inventory accumulation and reduced capital market financing by industrial corporations lead to more activation of bank credit lines and loan commitments. While industrial corporations appear to be reducing their use of capital markets, the calendar of new corporate issues will be fairly large as a result of scheduled offerings by utilities. State and local government offerings could build up again to near recent rates, unless increased financing costs trigger further cancellations. And bond markets will have to absorb $800 million of FNMA PC's just announced. The total volume of issues, while sizable, appears to be somewhat more moderate than in 1967. It could be marketed with relatively little rise in interest rates, even with reduced bank interest in longer-term markets, so long as expectations of an even tighter monetary policy and reduced availabilities of loan funds at banks do not become widespread. Policy alternative. Should the Committee wish to move further in a restraining direction, it may consider a net reserve position for banks fluctuating around zero (between, say, plus $50 million and minus $50 million), a rise in borrowings to consistently in a $250 - $350 million range, and a Federal funds rate averaging around 4-3/4 per cent, with occasional trades at 5 per cent. Such conditions will probably raise new dealer loan rates in New York from their recent 4-3/4--4-7/8 -8- CONFIDENTIAL (FR) January 5, 1968. per cent range to 5 per cent or better. And as a result, bill rates, especially short-term rates, are likely to adjust upwards. The cost of carry to dealers will be increased,and at current bill yields in the 3-month area the carry might be negative. Moreover, such a policy move will tend to revive market uncertainties about how far monetary restraint will go, and may make banks anxious to obtain whatever CD funds can while they can. they As more and more banks offer 5-1/2 per cent for 30-day money, the resulting upward pressures on bill rates might move the 3-month bill into a 5.20--5.40 per cent range. The equilibrium relationship that emerges between CD flows, CD rates, and bill rates is nevertheless likely to include a net decline in outstanding CD's during January, and a consequent retardation in bank credit expansion. The portfolio adjustments required of banks will intensify the upward interest pressures in long-term markets that may be generated by any psychological effects on lenders and borrowers of negative free reserves and the more frequent appearance of 5 per cent Federal funds trading. Such upward interest rate pressures could be partially offset by a further movement of funds by individuals and others into marketable obligations at the expense of time and savings accounts in banks and other savings institutions. Such shifts would, of course, drain funds, relatively, from the mortgage market. The net result of all these movements might be a general modest rise in long-term rates, but perhaps with the largest increase in mortgage rates (or in tightening of mortgage terms). Table A-1 MARGINAL RESERVE MEASURES (Dollar amounts in millions, based on period averages of daily figures) Member banks Excess reserves Period As Monthly (reserves Monthly (reserves is rev I Free borrowines ed to reserves I d a t e I. weeks ending in): As first published each week As expected at conclusion of each week's open market opeations 1966--)Decmber 333 529 -196 1967--January February 417 408 368 349 369 345 449 356 334 353 347 334 476 366 196 150 94 88 132 86 82 141 124 185 - 59 42 172 199 275 257 317 270 252 212 223 149 13 20 27 332 386 408 211 79 70 106 74 253 316 302 137 288 275 336 185 219 293 350 217 Oct. 4 11 18 25 413 249 561 190 144 145 216 58 269 104 345 132 298 151 378 164 271 186 379 106 Nov. 1 8 15 22 29 p 291 330 518 221 274 80 132 162 127 119 211 198 356 94 255 295 262 348 92 204 312 233 375 131 240 Dec. 6 13 20 27 p p p p 297 335 244 458 87 121 185 345 210 214 59 113 228 187 47 100 257 216 56 110 3 p 566 495 71 71 45 Mnrch April Mny June July August September October November December p I ____________________________________________ Weekly: 1967--S(pt . 6 Jan. p - Preliminary TABLE A-2 AGGREGATE RESERVES AND RELATED MMASURES Retrospective Changes, Seasonally Adjusted (In per cent, annual rates based on monthly averages of daily figures) g r egat e s Required reserves Against Nonborrowed Total Demand Total Re s e r v e Total ReReserve A Var iab le s Monetary Money Supply Time r lM Total Member Private Deposits B a n k Deposits Demand Demand Total (comm. / / i Deposits banks) Deposits Annually: 1965 + 5.2 + 4.2 + 5.1 + 2.3 + 9.1 +16.0 + 4.7 + 4.3 1966 + 1.2 + 0.8 + 1.4 + 0.9 + 3.7 + 8.8 + 2.2 + 1.2 Monthly: 1966--Jul. + 8.1 + 6.0 + 4.9 + 5.9 + 9.3 +16.3 - 4.9 - 8.1 Aug. Sept. -15.2 + 4.5 -13.0 - 2.0 - 8.4 1.0 -11.5 - 4.5 - 1.0 0.5 + 9.2 + 3.8 + 1.4 + 2.8 + 0.9 + 1.8 Oct. - 6.9 - 6.4 - 3.0 - 7.2 - 4.4 + 1.5 - 2.8 - 4.5 Nov. - 3.1 + 8.3 - 3.1 - 0.5 - - Dec. - 0.9 - 0.7 + 1.8 - 6.7 + 2.0 + 9.8 +19.2 +26.0 +14.4 +14.0 +16.1 +16.5 - +11.5 +21.6 + 2.5 - 0.4 + 8.4 +11.3 +13.5 + 9.6 +15.3 + 7.5 - 6.1 +17.4 +29.4 + 4.7 + 4.9 + 4.9 +15.2 +14.7 + 4.8 +12.4 +10.8 -14.0 +12.0 +15.3 + 8.1 - 1.2 + 4.8 +16.0 +15.6 + 9.0 +18.0 + 5.5 - 0.2 +11.6 + 9.8 + 5.0 - 2.1 - 2.8 +15.8 +14.4 + 7.1 +16.0 + 3.4 -10.6 +15.9 +14.3 + 9.9 + 5.6 + 8.8 +15.2 +16.9 +10.3 +11.6 + 8.4 -- +19.3 +19.0 +14.4 +13.5 +17.5 +15.2 +17.1 +11.4 +12.7 +11.9 + 8.5 + 8.5 +11.2 - 2.8 +12.5 +11.7 +11.6 + 8.1 + 0.7 + 6.7 + 7.3 + 1.3 1967--Jan. Feb. Mar. Apr. May June Jul. Aug. Sept. Oct. Nov. Dec. p 1/ 2/ p - 3.4 -- 2.3 + 2.1 0.7 - 0.9 + 0.9 - 2.7 + 9.1 +12.7 - 5.4 +15.3 +13.3 +14.0 +10.4 - 0.9 + 6.9 + 8.6 - 1.7 Includes all deposits subject to reserve requirements. Movements in this aggregate correspond closely with movements in total member bank credit. Changes in reserves, total deposits and time deposits have been adjusted for redefinition of time deposits effective June 9, 1966. Preliminary. Chart 1 MEMBER BANK RESERVES MONTHLY AVERAGES OF DAILY FIGURES BILLION S OF DOLLARS 1.0 MEMBER BANK BORROWINGS - - - -h-- .5 EXCESS 0 I I J J ' I' RESERVES ' I ' I' J ' M 1966 J 1967 IM s D S D I S Chart 2 MEMBER BANK DEPOSITS AND LIABILITIES TO OVERSEAS BRANCHES BILLIONS OF DOLLARS 1 1 I-- 1 1 TOTAL MEMBER BANK DEPOSITS [CREDIT PROXY) 286 WEEKLY 22 SEAS ANJ T- I AVERAGE OF DAILY FIGURES 278 274 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 270 266 262 258 254 - -- -_ _ _ _ _ _ _ _ _ _ 250__ 6 LIABILITIES TO OVERSEAS BRANCHES (WEEKLY REPORTING BANKS] NOT SEAS ADJ, WEDNESDAYS 4 2 V_____ I_ 0o S 1966 D _ mJ S 1967 D Chart 3 MONEY SUPPLY AND BANK DEPOSITS SEASONALLY ADJUSTED WEEKLY AVERAGES OF DAILY FIGURES I BILLIONS OF DOLLARS BILLIONS 190 180 MOP 175 185 170 180 _-_ 175 165 160 TIME DEPOSITS (All Commercial - 170 S 165 ADJUSTED Banks) -160 -0000 -- - - -4 _____ - 25 - NEGOTIABLE CD'S (Unadiusted) 20 15 10I I 1966 1966 I I II 1967 1967 *CHANGE IN SERIES - 155 - 150 145 Chart 4 DEMAND DEPOSITS AND CURRENCY SEASONALLY ADJUSTED WEEKLY AVERAGES OF DAILY FIGURES BILLIONS OF DOLLARS OF DOLLA BILLIONS I I I i iI 45 MONEY SUPPLY COMPONENTS: 40 CURRENCY 35 -.... OUTSIDE BANKS - ______ .... __ 30 140 -- 135 DEMAND DEPOSITS -- 130 125 120 - -- 15 __ U.S. GOVT. DEMAND DEPOSITS Banks) (Member 10 ---- - 5 o - I I - I M ID I1 I J 1966 S D S M 1967 D 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 Technical Currency Gold Reserve Federal _ Gold _ _ _ credit (excl. outside factors Period Period float ~~~~____~~______float) / 1/ stock banks 1banks net 2/ net 2/ = Change in _ _ total reserves reserves = Bank use of reserves Excess Required _ rExcess reserves 3reserves 3/_____ Year: 1966 (12/29/65 - 12/28/66) 1967 (12/28/66 - 12/27/67) +3,149 +4,718 Year-to-date: (12/28/66 - 1/4/67) (12/27/67 - 1/3/68) 319 554 Weekly: 1967--Dec. + 21 - 63 497 639 + + 539 531 +108 247 338 38 378 + 97 +479 +b77 +449 208 146 485 507 + + + 285 184 576 293 639 + 531 +805 -165 +1,085 +1,536 475 b00 -2Q4 -452 - 154 + 433 + 2 + 554 -452 + 600 - 63 10 17 5/ 24 5/ 31 + 195 160 15 120 ----- + + + 70 360 175 255 -180 -165 + 20 -420 + + - 445 35 180 45 + + - 445 35 180 45 7 14 21 + - 535 280 285 --- + + 420 50 110 -150 -+ 15 - 35 230 160 - 35 230 160 PROJECTED Feb. +1,111 +1,515 -2,243 -2,292 - 1968--Jan. 1968--Jan. -627 -725 + 495 + 53 -137 -339 / 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. 11, effective January 18. 1968. p - Preliminary. 1968, and $190 million - 26 - 42 - 77 + 38 - 91 +214 +108 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) Supporting U. S. Gov't. U.S. Gov't. required Sresdemand _Supporting Total Period Total rerdeposits Year: 1966 (12/29/65 - 12/28/66) 1967 (12/28/66 - 12/27/67) private deposits Seasonal changes Demand Time Other than O r han seasonal changes Time Demand +1,221- / + 1681 +1,111 +1,515 - 87 +228 +1,198 +1,287 - 14 + 59 + 4 6 - 5 +1,054 + + 539 531 - 34 -218 + + 573 749 +334 +380 + 24 + 21 +195 +348 + 20 6 p p 20 p 27 p + + + 285 184 276 293 - 37 -215 +206 +305 + + + - 322 31 370 12 +206 +132 +395 -102 - 5 -6 + 6 +111 -120 - 19 +102 + + 10 19 - 18 1968--Jan. 3 p + 531 -218 + 749 +380 + 21 +348 1968--Jan. 10 17 2/ 24 2/ 31 + + - 445 35 180 45 - 65 -165 +450 +100 + - 380 200 270 145 -160 -145 -340 -105 + 10 + 20 + 5 + 5 -240 +315 + 55 - 60 + + + + 10 10 In 7 14 - 35 165 + 65 - 60 - 100 105 - 90 -105 + 10 + 5 - 30 - 15 + + 10 10 21 - 65 - 65 -220 - +150 + 10 Year-to-date: (12/28/66 - 1/4/67) (12/27/67 - 1/3/68) Weekly: 1967--Dec. 13 PROJECTED Feb. 1/ 2/ -- 5 Reflects reserves requirements changes in July, September 1966, and March 1967. Includes increase in reserve requirements of $360 million effective Jan. 11, 1968, and $190 million effective January 18, 1968. - ,1 imirr 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 ACTUAL Treasury operations Float Foreign deposits and gold Other nonmember deposits and loans F. R. accounts (Sign indicates effect on reserves) Year: 1966 (12/29/65 - 12/28/66) 1967 (12/28/66 - 12/27/67) +805 -165 +673 - 85 + 64 -389 - 30 7 + 98 +316 Year-to-date: (12/28/66 - 1/4/67) (12/27/67 - 1/3/68) -294 - 63 - 27 -229 -284 -116 - 23 + 3 + 40 +279 6 13 20 27 + 97 +479 +677 +449 +267 +516 - 54 +182 +107 - 3 +503 +233 + 15 + 20 - 16 + 6 -292 - 54 +244 + 28 1968--Jan. 3 - 63 -229 -116 + +279 1968--Jan. 10 -180 - 20 -220 17 24 31 -165 + 20 -420 - 25 -- -140 + 20 -420 -- 7 14 21 -150 -+ 15 --- -150 - 70 +300 --- Weekly: 1967--Dec. 3 PROJECTED Feb. -- + 60 -- + 70 -285 Table B-4 SOURCE OF FEDERAL RESERVE CREDIT Retrospective Changes (Dollar amounts in millions of dollars, based on weekly averages of daily figures) Total Federal Reserve credit (Excl. float Period U.S. Government securities Total ills Repurchase agreements holdings Federal Bankers' Agencyacceptances Securities Member banks borrowings Year: 1966 (12/29/65 - 12/28/66) 1967 (12/28/66 - 12/27/67) Year-to-date: (12/28/66 - 1/4/67) (12/27/67 - 1/3/68) Weekly: 1967--Dec. Jan. +3,149 +4,718 -3,069 -5,009 +2,158 +4,433 319 282 328 434 195 223 134 145 141 195 554 6 13 20 27 495 154 433 497 38 145 222 3 554 328 53 + 474 +1,153 + 149 ________ 4 +437 -577 + 26 19 + 52 - 69 + 2 -203 -152 +133 + 1 + 33 + 19 + 43 + 17 +150 +125 -172 + + 81 + +133 + 33 - - 32 + 34 + 64 +160 9 - -11I 7 +150 - Chart Reference Table C-1 TOTAL, NONBORROWED AND REQUIRED RESERVES 1/ Seasonally Adjusted (Dollar amounts in millions, based on monthly averages of daily figures) Period Total reserves reserves Nonborrowed reserves reserves uired reserves Re reserves Required Total Total Against private depos: Demano Total 21,857 21,356 21,488 20,626 15,921 Aug. Sept. Oct. Nov. Dec. 21,923 21,869 21,986 21,976 22,186 21,417 21,318 21,533 21,589 21,722 21,533 21,494 21,645 21,671 21,861 20,719 20.904 21,073 21,170 21,285 15,943 16,065 16,147 16,196 16,266 1966--Jan. Feb. Mar. Apr. May June Jul. Aug. Sept. Oct. Nov. Dec. 22,358 22,401 22,452 22,679 22,703 22,707 22,861 22,571 22,655 22,524 22,465 22,449 21,899 21,943 21,873 22,027 22,020 22,030 22,140 21,900 21,864 21,748 21,898 21,885 22,007 22,028 22,077 22,252 22,308 22,339 22,431 22,274 22,256 22,200 22,142 22,175 21,411 21,464 21,600 21,771 21,782 21,883 21,841 21,842 21,860 21,741 21,716 21,772 16,375 16,413 16,506 16,605 16,562 16,606 16,512 16,473 16,475 16,365 16,364 16,378 1967--Jan. Feb. Mar. Apr. May June Jul. Aug. Sept. Oct. Nov. Dec. p 22,808 23,026 23,441 23,490 23,482 23,646 23,869 24,138 24,331 24,642 24,797 24,646 22,360 22,685 23,240 23,332 23,428 23,523 23,830 24,121 24,217 24,467 24,688 24,401 22,442 22,666 22,955 23,110 23,086 23,178 23,488 23,794 23 972 24,332 24,443 24,439 21,803 22,044 22,297 22,293 22,559 22,890 23,049 23,275 23.329 23,450 23,612 23,637 16,328 16,478 16,647 16,578 16,786 17,024 17,115 17,246 17,236 17,313 17,411 17,394 1965--Jul. p - Preliminary. 1/ effective June 9, 1966. Reserves have been adjusted for redefinition of time deposits 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) Monthly Total member bank deposits (credit) 1/2/ 1965--Jul. Aug. Time de t de posit s Private demand U.S. Gov't. demand deposits 3/ deposits 229.1 230.4 113.6 115.4 108.6 108.8 6.8 6.3 Sept. Oct. Nov. Dec. 231.4 233.5 234.8 236.4 116.9 119.0 120.2 121.2 109.6 110.1 110.5 111.0 4.9 4.4 4.1 4.2 1966--Jan. Feb. Mar. Apr. May June Jul. Aug. Sept. Oct. Nov. Dec. 238.0 239.0 239.8 242.2 243.9 244.8 246.7 246.5 246.4 245.5 244.8 245.2 121.7 122.0 123.0 124.8 126.1 127.5 128.7 129.7 130.1 129.9 129.3 130.3 111.7 112.0 112.6 113.3 113.0 113.3 112.6 112.4 112.4 111.6 111.6 111.7 4.7 5.0 4.2 4.1 4.8 4.0 5.3 4.4 3.9 4.0 4.0 3.2 1967--Jan. Feb. Mar. Apr. May June Jul. Aug. Sept. Oct. Nov. Dec. p 248.5 251.8 254.8 256.9 258.1 260.0 263.3 267.0 269.3 271.9 273.8 273.8 132.2 134.4 136.5 138.0 139.4 141.7 143.3 145.6 147.2 148.2 149.8 149.9 111.4 112.4 113.6 113.1 114.5 116.1 116.7 117.6 117.6 118.1 118.8 118.6 4.9 5.0 4.8 5.8 4.1 2.2 3.2 3.7 4.5 5.6 5.3 4.3 1/ 2/ 3/ 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. Deposits have been adjusted for redefinition of time deposits effective June 9. 1967. Private demand deposits include demand deposits of individual, partnerships and corporations and net interbank balances. 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) Total member bank deposits Week ending: Time deposits (credit 1/2/ 2/ Private demand U. S. Gov't. demand deposits 3/ deposits 1967- -June 7 14 21 28 259.3 260.2 261.2 259.9 140.9 141.6 141.8 142.1 115.9 116.1 116.2 116.2 2.6 2.6 3.2 1.6 Jul. 5 12 19 26 260.4 261.7 263.9 264.6 142.5 142.9 143.4 143.7 116.9 117.2 116.6 116.6 1.0 1.6 2 9 16 23 30 265.8 267.0 266.7 266.8 267.0 144.4 145.0 145.4 145.8 146.5 117.2 117.5 117.4 117.6 117.6 4.3 4.4 6 13 20 27 269.3 269.6 268.8 269.1 146.9 147.0 147.2 147.3 118.3 118.3 116.1 117.4 4.1 4.3 4 11 18 25 269.7 271.0 273.1 272.3 147.6 148.4 148.4 118.6 118.9 118.4 117.6 3.6 4.1 6.3 6.4 1 8 15 22 29 273.1 273.6 273.5 274.2 273.7 148.9 149.0 149.6 150.1 150.4 117.6 118.9 118.5 118.7 118.6 6.7 5.7 5.5 6 13 20 27 274.3 150.6 151.0 119. 1 118.4 117.9 118.5 Aug. Sept. Oct. Nov. Dec. 273.6 273.1 273.6 148.0 150.7 150.7 4.0 4.3 3.9 3.4 3.0 5.5 4.5 5.5 4.7 4.6 4.2 4.5 4.4 1968- -Jan. 3 275.2 150.7 120.8 3.8 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/ Deposits have beenadjusted for redefinition of time deposits effective June 9, 1966. 3/ Private demand deposits include demand deposits of individuals, partnerships 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) Private Monthly Money Supply Currency 1/ Time Deposits Demand Deposits / Adjusted 1965--Jul. Aug. Sept. Oct. Nov. Dec. 162.4 163.2 164.0 165.2 165.7 166.8 35.3 35.5 35.7 36.0 36.1 36.3 127.2 127.8 128.4 129.3 129.6 130.5 137.9 139.8 141.6 143.8 145.5 146.9 1966--Jan. Feb. March Apr. May June Jul. Aug. Sept. Oct. Nov. Dec. 167.9 168.3 169.2 170.5 170.2 170.6 169.9 170.1 170.5 170.1 170.1 170.4 36.6 36.7 36 9 37.1 37.3 37.4 37.7 37.8 37.9 38.0 38.1 38.3 131.4 131.6 132.3 133.4 132.9 133.2 132.3 132.4 132.6 132.1 132.0 132.1 147.5 148.3 149.8 151.8 153.4 154.8 156.9 158.1 158.6 158.8 158.5 159.8 1967--Jan. Feb. Mar. Apr. May June Jul. Aug. Sept. Oct. Nov. Dec. p 170.3 171.5 173.1 172.7 174.5 176.2 177.9 179.1 179.2 180.2 181.3 181.5 38.5 38.7 38.9 39.1 39.2 39.3 39.5 39.6 39.8 39.9 40.0 40.3 131.8 132.8 134.2 133.6 135.3 136.8 138.4 139.6 139.5 140.3 141.3 141.1 162.0 164.6 167.2 169.2 171.1 173.6 175.8 178.3 180.0 181.9 183.7 185.0 1/ 3/ Includes currency outside the Treasury, the Federal Reserve, and the vaults of all commercial banks. 2/ 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. 3/ Deposits have been adjusted for redefinition of time deposits effective June 9, 1966. p - Preliminary. TABLE C-3a MONEY SUPPLY AND TIME DEPOSITS AT ALL COMMERCIAL BANKS Seasonally Adjusted (Dollar amounts in billions, based on weekly averages of daily figures) Private Week Ending Money Supply Currency 1/ SEDeposits Time Deposits Demand 2/ s i/ adjusted -/ 1967--June 7 14 21 28 176.0 176.3 176.4 176.4 39.3 39.4 39.4 39.4 136.7 136.9 137.0 136.9 172.6 173.6 173.7 173.9 July 5 12 19 26 177.6 178.1 177.7 177.8 39.4 39.5 39.4 39.4 138.2 138.b 138.3 138.4 174.6 175.4 175.8 176.1 Aug. 2 9 16 23 30 178.3 178.8 179.2 179.1 179.1 39.4 39.6 39.6 39.6 39.6 138.9 139.3 139.7 139.5 139.5 176.8 177.8 178.2 178.5 179.2 Sept. 6 13 20 27 179.7 180.0 178.0 179.3 39.7 39.8 39.7 39.7 139.9 140.2 138.2 139.5 179.6 179.8 180.2 18g.3 Oct. 4 11 18 25 180.3 180.9 180.5 179.6 39.8 39.9 40.0 39.9 140.5 140.9 140.5 139.7 180.7 181.2 182.0 182.3 Nov. 1 8 15 22 29 180.3 181.3 181.3 181.2 181.1 39.8 40.0 40.0 40.1 40.1 140.5 141.3 141. 1 141.0 182.8 182.8 183.5 184.1 184.3 6 13 20 27 181.4 180.9 40.1 40.3 180.8 40.3 182.0 40.5 141.3 140.6 140.4 141.5 184.9 185.3 185.1 184.7 3 183.3 40.4 142.9 184.6 Dec. 1968--Jan. 141.4 1/ 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. 3/ Deposits have been adjusted for redefinition of time deposits effective June 9, 1966. p - Preliminary. 2/
@FedFRASER