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Strictly Confidential (FR) Class I FOMC March 17, 1978 MONETARY AGGREGATES AND MONEY MARKET CONDITIONS Prepared for the Federal Open Market Committee By the staff Board of Governors of the Federal Reserve System March 17, 1978 STRICTLY CONFIDENTIAL (FR) CLASS I - FOMC MONETARY AGGREGATES AND MONEY MARKET CONDITIONS Recent developments (1) M-1 declined at about a 4 per cent annual rate in February, but growth appears to have resumed in March and, over the two months, is projected at about a per cent annual rate, slightly below the lower end of the FOMC's range.1 / Reflecting weakness in M-1, M-2 growth over the February-March period is projected at around a 5 per cent annual rate, in the lower half of its range. Large denomination time deposits included in M-2 have continued to expand sharply in recent weeks, while flows into small time and savings deposits have remained quite weak. Deposit growth at thrift institutions has been relatively slow as well. Growth in Monetary Aggregates over February-March Period (SAAR in per cent) M-1 M-2 Memo: 4 Range Latest Estimates 1 to 6 .5 to 8 5.0 Federal funds rate (per cent per annum) Avg. for statement week ending 6.80 Mar. 1 8 6.76 15 1/ 6.77 These figures do not incorporate the revisions for benchmarking based on recently available call report data for nonmember banks and for regular annual adjustments of seasonal factors; these revisions will be published on March 23. Growth rates for 1977 were increased--for M-1, from 7.4 to 7.8 per cent; for M-2, from 9.6 to 9.8 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. in Appendix III. The new and old series are compared -2(2) The Account Manager aimed for a Federal funds rate of around 6¾ per cent throughout the intermeeting period, even though M-1 and M-2 growth weakened relative to their respective ranges. The FOMC, in a telephone meeting on March 10, decided to retain the 6¾ per cent funds rate target for the time being in view of the weakness of the dollar in international exchange markets and the probability that the economic effects of the prolonged coal strike and severe weather were temporarily depressing the aggregates. (3) With Federal funds trading steadily at rates around 6¾ per cent, private short-term interest rates have remained essentially unchanged since the February FOMC meeting. Treasury bill rates, however, have edged down a bit further over this period, mainly in response to continued large foreign central bank acquisitions of these securities. In addition, the volume of Treasury bill financing has been somewhat smaller than previously anticipated, reflecting a short-fall in Federal outlays and lagging disbursements of tax refunds. Bond yields also have edged lower as the volume of public bond offerings by corporations and State and local governments has remained moderate. (4) Yields in both primary and secondary sectors of the mortgage market have stayed about unchanged since late February, following their advance earlier in the first quarter. However, with deposit inflows still sluggish, S&L's have continued their sizable borrowings from the Federal Home Loan Banks. As a result, the thrifts -3probably have continued to become less accommodative in extending new loan commitments and appear to be tightening lending terms. (5) The table on the next page shows (in terms of percentage annual rates of change) related monetary and financial flows over various time periods. 1976 & 1977 Average Past Twelve Months Feb. '78 over Feb. '77 Past Six Months Feb. '78 over Aug. '77 Past Three Months Feb. '78 over Nov. '77 Past Month Feb. '78 over Jan. '77 Nonborrowed reserves 1.5 6.4 11.3 15.8 4.3 Total reserves 2.1 7.4 7.3 10.4 1.7 Monetary Base 7.6 9.3 9.5 10.2 5.3 6.9 7.2 6.0 5.3 -1.1 10.3 8.6 7.3 6.4 4.4 12.2 10.3 9.0 7.2 5.2 M-4 (M-2 plus CD's) 8.8 9.9 10.6 9.8 8.2 M-5 (M-3 plus CD's) 11.1 11.1 10.9 9.2 7.5 Month-end basis 9.5 10.5 8.6 7.2 10.1 Average of Wednesdays 9.3 10.9 10.1 9.4 12.0 -0.3 1.3 2.7 2.8 3.1 0.2 0.1 -0.1 -0.3 -0.5 Concepts of Money (Revised Series) M-1 (Currency plus demand deposits) 1/ M-2 (M-1 plus time deposits at commercial banks other than large CD's) M-3 (M-2 plus deposits at thrift institutions) Bank Credit Loans and investments of all commercial banks 2/ Short-term Market Paper (Monthly average change in billions) Large CD's Nonbank commercial paper 1/ Other than interbank and U.S. Government. 2/ Includes loans sold to affiliates and branches. NOTE: All items are based on averages 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 Wednesday statement date 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 (6) The table below presents for Committee consideration three alternative sets of specifications for the monetary aggregates and the Federal funds rate for the forthcoming intermeeting period. (More detailed and longer-term data for the aggregates are shown in the tables on pp. 6 and 7.) Alt. A Alt. B Alt. C M-1 5 to 10 4½ to 9½ 4 to 9 M-2 6½ to 10½ 6 to 10 5½ to 9½ Federal funds rate (Intermeeting period) 6 to 6½ Ranges for March-April (7) 6½ to 7 7 to 7½ Each of the alternatives is consistent with the growth ranges for QIV '77 to QIV '78--as indexed by M-1 growth in a 4 to 6½ per cent range--adopted by the Committee at its February meeting and each requires that interest rates would rise over the balance of the year in order to constrain growth in the aggregates to the midpoint of the longer-run ranges. Under alternative B, the Federal funds rate would be expected to remain unchanged over the intermeeting period and then begin rising thereafter, reaching about 8 per cent by fall. 1/ The near-term decline in the funds rate contemplated The ranges are based on the revised series for the monetary aggregates, described in Appendix III. The benchmark revision raised the growth of M-1 and M-2 in 1977 by .4 and .2 of a percentage point. The impact of the revision was reported orally to the FOMC at its last meeting, when the current longer-run ranges were established. Alternative Levels and Growth Rates for Key Monetary Aggregates M-2 M-1 Alt. A Alt. B Alt. C Alt. A Alt. B Alt. C 1978 February March April 339.1 340.5 343.4 339.1 340.4 343.1 339.1 340.3 342.8 816.6 821.4 828.3 816.6 821.1 827.6 816.6 820.8 826.9 1977 QIV 335.3 335.3 335.3 803.9 803.9 803.9 1978 QI QII 339.7 345.0 339.6 344.5 339.6 344.1 817.2 833.7 817.1 832.9 817.0 832.5 QIII QIV 349.0 353.0 348.2 353.0 348.0 353.0 851.6 868.8 849.9 866.0 848.0 863.3 5.0 10.2 4.6 9.5 4.2 8.8 7.1 10.1 6.6 9.5 6.2 8.9 Quarterly Average: 1978 QI QII QIII QIV 5.2 6.2 4.6 4.6 5.1 5.8 4.3 5.5 5.1 5.3 4.5 5.7 6.6 8.1 8.6 8.1 6.6 7.7 8.2 7.6 6.5 7.6 7.4 7.2 Semi-Annual: QIV '77-QII '78 QII '78-QIV '78 5.8 4.6 5.5 4.9 5.2 5.2 7.4 8.4 7.2 7.9 7.1 7.4 Annual: QIV '77-QIV '78 5.3 5.3 5.3 8.1 7.7 7.4 Growth Rates Monthly: 1978 March April Alternative Levels and Growth Rates for Key Monetary Aggregates (cont'd) M-3 Bank Credit Alt. A Alt. B Alt. C Alt. A Alt. B Alt. C 1978 Februar3 March April 1390.0 1398.3 1409.3 1390.0 1397.9 1408.1 1390.0 1397.4 1406.8 889.0 895.5 902.0 889.0 895., 901.8 889.0 895.5 901.6 1977 QIV 1365.4 1365.4 1365.4 865.0 865,0 865.0 1978 QI QII QIII QIV 1390.8 i419.0 1450.4 1481.6 1390.6 1417.2 1446.3 1475.1 1390.5 1416.0 1442.5 1468.9 888.1 909.8 929.0 946.3 888.1 909.6 928.7 945.8 888.1 909.4 928.4 945.3 Growth Rates Monthly: 1978 March April 7.2 9.4 6.8 8.8 6.4 8.1 8.8 8.7 8.8 8.4 8.8 8.2 Quarterly Average: 1978 QI QII QIII QIV 7.4 8.1 8.9 8.6 7.4 7.7 8.2 8.0 7.4 7.3 7.5 7.3 10.7 9.8 8.4 7.4 10.7 9.7 8.4 7.4 10.7 9.6 8.4 7.3 Semi-Annual: QIV '77-QII '78 QII '78-QIV '78 7.9 8.8 7.6 8.2 7.4 7.5 10.4 8.0 10.3 8.0 10.3 7.9 Annual: QIV '77-QIV '78 8.5 8.0 7.6 9.4 9.3 9.3 under alternative A would likely require a greater rise in this rate over the summer and fall. Under alternative C, restraint would begin earlier; thus the required upward adjustments in the funds rate over 1978 would be somewhat less.1/ The levels of interest rates consistent with each alternative imply continued relatively slow growth of interest-bearing deposits subject to rate ceilings at banks and thrift institutions, even though the projections of deposit aggregates assume a 50 basis point increase in time deposit ceiling rates in the months ahead. (8) It is likely that the recent weakness in M-1 growth will be reversed over the near-term. weather conditions is The abatement of severe expected to contribute to an acceleration of economic activity and an associated pick-up in money demand. Moreover, tax refunds are expected to accelerate in coming weeks, thus temporarily buoying money balances in March-April. In addition, the restraining impact on money demand of the relatively sharp increase in interest rates from the spring to the fall of last year by now probably has been exhausted, and short-term rate increases since fall have been relatively small, about 1/4 of a percentage point. (9) Against this background, M-1 growth is expected to accelerate in the weeks ahead. Given the Federal funds rate assump- tion of alternative B--with the rate centered at the 6¾ per cent 1/ See Appendix I for projected Federal funds rate under each alternative. Appendix II displays the implied velocities of M-1 and M-2 associated with each alternative. level prevailing since early January--M-1 growth over March-April is likely to be in a 4 (10) to 9 per cent annual rate range. Growth in M-2 over this period is expected to be in a 6 to 10 per cent annual rate range under alternative B. As has been the case since last fall, savings deposits at commercial banks are projected to remain essentially unchanged. Temporary inflows from larger than seasonal tax refunds may do little more than offset deposit weakness caused by the large differential between market rates and the ceiling rate on passbook savings accounts. With market yields also above the effective ceiling rates on all maturities of small denomination time deposits at commercial banks, such deposits are likely to grow only moderately in the March-April period. However, loan demands are expected to remain relatively strong; thus banks are likely to continue aggressively to offer large denomination time deposits in order to supplement their deposit base. of these deposits is included in M-2. A major portion Consequently the interest- bearing component of this aggregate is projected to continue to expand at an 8 to 9 per cent seasonally adjusted annual rate. (11) The modest pace of inflows to thrift institutions can be expected to persist in March-April under alternative B. Growth of deposits at mutual savings banks and savings and loan associations, combined, may be around a 6 to 7 per cent annual rate. Over subsequent months, the assumed increase in deposit rate ceilings would keep deposit inflows to thrifts from eroding further as market -10interest rates rise. Reductions in thrift portfolio liquidity and increased borrowings from the Federal Home Loan Banks and from other sources are thus likely to continue in order to finance takedowns of existing commitments. Moreover, further reductions in new commitment activity and in spot purchases of mortgages from mortgage bankers and others can be expected. (12) If the Federal funds rate remains at the 6¾ per cent level contemplated under alternative B, short- and intermediateterm interest rates over the intermeeting period are likely to remain near their current levels. Some upward rate pressures might develop as accelerating economic activity bolsters financing demands of businesses at banks and in the commercial paper market. In addition, Treasury borrowing in short- and intermediate-term markets between now and mid-April will be relatively heavy. Potential upward rate pressures in the short-term sector will tend to be offset, however, by market anticipation of the substantial pay-down of Treasury bills following the mid-April tax date. Moreover, rates on shorter-term Treasury securities could remain low relative to other market rates, should foreign central banks continue to acquire large amounts of such securities as a result of their intervention activities in foreign exchange markets. (13) Under alternative B, mortgage rates might rise somewhat further in the intermeeting period as thrifts adjust lending policies in response to sustained weak deposit inflows. - 1The Bond yields, however, are expected to be essentially unchanged. forward calendar for corporate issues remains relatively modest and institutional demands large. Furthermore, the forward calendar for tax-exempt offerings continues below the exceptional 1977 level and interest in such issues by fire and casualty insurance companies, commercial banks, and individuals are projected to remain sizable. (14) Alternative C contemplates an increase in the Federal funds rate to the mid-point of a 7 to 7-1/2 per cent range between now and mid-April. Growth in M-1 in the March-April period would probably be in a 4 to 9 per cent and M-2 in a 5-1/2 to 9-1/2 per cent annual rate range. Although the market is expecting some tightening of policy later this spring, an increase in the Federal funds rate over the near-term apparently is not being anticipated by market participants, given the recent moderation of growth in the monetary aggregates. The 3-month bill might move into a 6-5/8--6-3/4 per cent area, and there would be commensurate adjustment in other short-term rates. Member bank borrowing from the discount window would rise substantially, producing expectations of an upward adjustment in the discount rate. Such borrowing has been relatively low recently, and no banks are under administrative pressure at the window. (15) The sizable increase in short-term rates likely to develop under alternative C would probably be accompanied by only modest upward pressure on bond yields in the intermeeting period. -12As previously noted, new bond offerings are expected to be modest and institutional investment demand strong. By contributing to slower deposit inflows, however, alternative C would add to near-term upward pressure on mortgage rates and increase the need for an adjustment in deposit ceiling rates. (16) An easing of the Federal funds rate to around 6¼ per cent, as contemplated under alternative A, would be very surprising to the market in light of the weakness of the dollar in foreign exchange markets and recent indications of acceleration in the rise of wholesale and retail prices. In addition, if staff pro- jections are correct, such an easing action would be taking place in conjunction with publication of accelerated growth in M-1. Short- term market rates would decline, with the 3-month Treasury bill rate possibly falling below 6 per cent. The value of the dollar would probably decline in international exchange markets. Long-term interest rates would probably decline little, since market participants would likely view such an action as temporary. Indeed, as noted earlier, interest rates would soon need to begin rising in order to restrain growth in the aggregates to the mid-point of their longer-run ranges, and by autumn would have to reach levels higher than under alternatives B and C. -13Directive language (17) Given below are alternatives for the operational paragraphs of the directive. The first formulation places main emphasis on near-term rates of growth in monetary aggregates. The second formulation, like the directive adopted at the last meeting, places main emphasis on money market conditions; it shows--in strikethrough form--the specifications adopted at the last meeting. As suggested below, the particular language needed in the opening lines of the money market formulation would depend on the specific conditions sought; the three alternatives shown--calling, respectively, for somewhat easier, prevailing, and somewhat firmer money market conditions--are intended to be associated with the specifications discussed in the preceding section under alternatives A, B, and C. "Monetary Aggregates" Formulation The Committee seeks to encourage near-term rates of growth in M-1 and M-2 on a path believed to be reasonably consistent with the longer-run ranges for monetary aggregates cited in the preceding paragraph. Specifically, at present, it expects the annual growth rates over the March-April period to be within ranges of ____ ____ to ____ per cent for M-2. per cent for M-1 and ____ to In the judgment of the Committee such growth rates are likely to be associated with a weekly-average Federal funds rate of about ____ per cent. If, giving approx- imately equal weight to M-1 and M-2, it appears that growth rates -14over the 2-month period will deviate significantly from the midpoints of the indicated ranges, the operational objective for the Federal funds rate shall be modified in an orderly fashion within a range of ______ to ______ per cent. In the conduct of day-to-day operations, account shall be taken of emerging financial market conditions, including the conditions in foreign exchange markets. If it appears during the period before the next meeting that the operating constraints specified above are proving to be significantly inconsistent, the Manager is promptly to notify the Chairman who will then decide whether the situation calls for supplementary instructions from the Committee. "Money Market" Formulation At this time, the Committee seeks to maintain about the prevailing money market conditions (OR TO ACHIEVE SOMEWHAT EASIER OR SOMEWHAT FIRMER MONEY MARKET CONDITIONS) during the period immediately ahead, provided that monetary aggregates appear to be growing at approximately the rates currently expected, which are believed to be on a path reasonably consistent with the longer-run ranges for monetary aggregates cited in the preceding paragraph. Specifically, the Committee seeks to maintain the weekly-average Federal funds rate at about the current level (OR TO REDUCE OR TO INCREASE THE WEEKLYAVERAGE FEDERAL FUNDS RATE SOMEWHAT FROM THE CURRENT LEVEL) ____, -15Februaryso long as M-1 and M-2 appear to be growing over the [DEL: 1 to 6] March]MARCH-APRIL period at annual rates within ranges of [DEL: ______ TO ______ 4-1/2 to 8-1/2] ______ TO ______ per cent and [DEL: per cent, respectively. If, giving approximately equal weight to M-1 and M-2, it appears that growth rates over the 2-month period are approaching or moving beyond the limits of the indicated ranges, the operational objective for the weekly-average Federal funds rate shall be modified in an orderly fashion within a range of [DEL: 6-1/2-to-7] ____ TO ____ per cent. In the conduct of day- to-day operations, account shall be taken of emerging financial market conditions, including the conditions in foreign exchange markets. If it appears during the period before the next meeting that the operating constraints specified above are proving to be significantly inconsistent, the Manager is promptly to notify the Chairman who will then decide whether the situation calls for supplementary instructions from the Committee. Appendix I Projected Federal Funds Rate Alt. A Alt. B Alt. C 6-3/4 6-3/4 6-3/4 6-3/4 7-1/8 7-3/8 QIII 8 7-7/8 7-3/4 QIV 8-1/2 8 7-3/4 1978--QI QI1 Appendix II Implied Velocity Growth Rates VY (GNP/M 1978 V2 I 5.3 5.5 5.5 II 4.9 5.3 5.8 III 5.5 5.9 5.6 IV 6.6 5.7 5.4 I 3.9 3.9 4.1 II 3.1 3.4 3.4 III 1.6 2.1 2.7 IV 3.2 3.7 4.2 C Alt. B (GNP/M 1978 Alt. Alt. A 1 2 APPENDIX III Revisions in the Monetary Aggregates Benchmark adjustments for domestic nonmember banks and revised seasonal factors have been incorporated into the money stock series and related data. The benchmark adjustments are based on the most recent call report data and go back to December 1976. Seasonal factors have been revised to incorporate an additional year of data and adjustments resulting from the Board staff's annual review of these factors. Growth rates for the revised M 1 and M 2 in 1977 are 7.8 and 9.8 per cent, respectively, as compared with rates of 7.4 and 9.6 per cent for the old series. The impact of benchmark and seasonal factor changes on monthly, quarterly, and annual M 1 and M 2 growth rates for 1977 are shown in Tables III-1 and 111-2. The benchmark adjustments are based on corrected data for the universe of domestic nonmember banks for December 1976 as well as such universe figures for March, June, and September 1977. The adjustments added $400 million to M1 at the end of 1976 and $1.6 billion to the level of M at the end of 1977. The level of M 2 was reduced by $400 million at the end of 1976 and was raised by $1.4 billion at the end of 1977. As shown in column 4 of Tables III-I and 111-2, over the year 1977, on a quarterly average basis (QIV '76 to QIV '77), the benchmark adjustment added 0.4 percentage point to M1 and 0.2 to M 2 . For MI, the benchmark added about 1 percentage point to the growth rate in the first half of the year, but had essentially no effect on growth in the second half of the year. III - 2 Seasonal revisions, shown in the last column of Tables III-1 and III-2, smoothed the quarterly and the monthly data by considerably reducing bulges in growth of M-l that had occurred in April, July, and October of last year. April and October had also developed in 1976. Bulges in Growth in these months is still quite strong, however, possibly indicating development of a new seasonal pattern not yet fully captured in tne seasonal adjustment procedure. Table III-1 EFFECT OF BENCHMARK AND REVISED SEASONAL FACTORS ON M 1 GROWTH (Seasonally adjusted annual rates of change in per cent) I/ Differences due to:Old Series ReVised Series Difference (1) - (2) (1) (2) (3) (4) (5) 7.4 7.8 0.4 0.4 -- 4.2 6.9 2.7 1.1 1.6 QII 8.4 8.1 -0.3 1.2 -1.5 QIII 9.3 8.1 -1.2 0.3 -1.5 QIV 6.8 7.2 0.4 -0.4 0.8 3.6 5.1 1.5 5.4 9.2 3.8 0.7 3.1 February 0.8 5.3 4.5 1.5 3.0 March 5.4 7.6 1.2 1.8 -0.6 1.0 -6.5 2/ Annual1977 Benchmark Seasonal Factors 3/ Quarterly1977-QI 1978-QI (proj) 1.5 Monthly 1977-January April 19.4 13.9 -5.5 May 0.7 1.1 0.4 0.4 -- June 4.5 7.8 3.3 0.7 2.6 July 18.3 -6.8 -0.5 -6.3 11.5 August 5.9 6.2 0.3 -0.8 1.1 September 7.3 8.7 1.4 -0.8 2.2 10.9 -1.1 -0.4 -0.7 October 12.0 November -1.4 0.4 December 7.6 7.5 -0.4 -0.4 1978-January 7.2 9.6 2.4 2.4 -3.9 -1.1 2.8 2.8 5.0 4.6 February March (proj) In percentage points. From average of QIV to average of QIV. Quarterly average. 1.0 -0.4 1.0 -0.4 Table III-2 EFFECT OF BENCHMARK AND REVISED SEASONAL FACTORS ON M 2 GROWTH (Seasonally adjusted annual rates of change in per cent) 1/ Differences due to:Old Series 2/ Annual1977 Revised Series (1) (2) 9.6 9.8 Difference Benchmark (1) - (2) (3) (4) Seasonal Factors (5) 0.2 0.2 -- 1.0 0.2 0.8 9.0 -0.2 0.3 -0.5 9.9 -0.4 0.2 -0.6 7.6 8.0 0.4 0.4 6.0 6.6 0.6 0.6 3/ Quarterly- 9.9 1977-QI 9.2 QII 10.3 QIII QIV 1978-QI (proj) 10.9 Monthly 1977-January 9.7 11.2 1.5 0.2 1.3 February 7.1 9.2 2.1 0.7 1.4 March 8.6 9.6 1.0 0.5 0.5 -2.7 0.3 -3.0 13.5 April 10.8 May 4.7 5.3 0.6 0.3 0.3 June 8.1 9.4 1.3 0.5 0.8 -3.3 0.3 -3.6 16.6 July 13.3 August 6.4 7.7 1.3 1.3 September 7.9 9.0 1.0 1.0 9.7 -0.4 -0.4 0.7 October 10.1 November 4.7 5.4 December 5.7 5.7 8.2 8.9 3.5 6.3 1978-January February March (proj) -0.1 0.8 0.1 -0.1 0.7 0.2 0.5 4.4 0.9 0.1 0.9 6.6 0.3 0.2 0.1 In percentage points. From average of QIV to average of QIV. Quarterly average. Appendix Table IV-1 MONEY STOCK--M-l (Annual rates of growth, compounded quarterly)Base Period Ending Period 1975 1976 1977 74IV 1/ 7511 75111 75IV 761 7611 76111 761V 771 7711 I 2.3 II 4.3 6.4 III 5.0 6.3 6.3 IV 4.4 5.1. 4.5 2.8 I 4.5 5.0 4.6 3.7 4.7 II 4.9 5.4 5.2 4.8 5.9 7.0 III 4.7 5.1 4.9 4.6 5.2 5.4 3.8 IV 5.1 5.5 5.3 5.1 5.7 6.1 5.6 I 5.3 5.7 5.6 5.5 6.0 6.3 6.1 7.1 II 5.6 6.0 5.9 5.9 6.4 6.7 6.6 7.7 8.3 III 5.8 6.2 6.2 6.2 6.7 7.0 7.0 7.9 8.3 8.3 IV 6.0 6.3 6.3 6.3 6.7 7.0 7.0 7.8 8.0 7.8 * * * * 1978 751 ** 77III 77IV d******~ IV Alt. A 5.8 6.0 6.0 6.0 6.2 6.4 6.3 6.6 6.5 6.4 6.1 5.7 5.3 Alt. B 5.8 6.0 6.0 6.0 6.2 6.4 6.3 6.6 6.5 6.4 6.1 5.7 5.3 Alt. C 5.8 6.0 6.0 6.0 6.2 6.4 6.3 6.6 6.5 6.4 6.1 5.7 5.3 Based on quarterly average data. Appendix Table IV-2 MONEY STOCK--M-2 (Annual rates of growth, compounded quarterly) Base Period Ending Period 1975 1976 1977 1978 74IV 751 7511 75111 75IV 761 I 6.4 II 8.3 10.2 III 8.8 10.1 IV 8.3 9.0 8.4 6.9 I 8.9 9.5 9.3 8.9 11.0 II 9.1 9.7 9.5 9.4 10.7 10.4 III 9.1 9.5 9.4 9.3 10.1 9.6 IV 9.6 10.1 10.0 10.1 10.9 10.8 I 9.8 10.2 10.2 10.3 11.0 10.9 II 9.7 10.1 io.1 10.1 10.7 10.6 III 9.8 10.1 10.1 10.2 10.6 IV 9.7 10.0 9.9 9.9 Alt. A 9.3 9.5 9.4 Alt. B 9.2 9.4 Alt. C 9.1 9.3 7611 7611 76IV 771 7711 77111 9.9 8.9 11.1 13,2 12.3 11.3 10.7 11.3 10.3 9.4 10.6 10.6 11.0 10.3 9.8 10.3 10.3 10.2 10.2 10.5 9.8 9.3 9.2 8.2 9.4 9.6 9.4 9.3 9.4 8.9 8.6 8.5 8.1 9.3 9.3 9.4 9.3 9.2 9.2 8.7 8.4 8.2 7.8 9.2 9.1 9.3 9.2 9.1 9.1 8.6 8.2 8.0 7.6 IV 1/ Based on quarterly average data. 77IV Appendix Table IV-3 MONEY STOCK--M-3 (Annual rates of growth, compounded quarterly)Base Period Ending Period 1975 1976 1977 74IV I 751 7511 75111 751V 761 7611 76111 76IV 771 7711 7711 77IV 8.3 II 10.6 13.0 III 11.5 13.1 13.2 IV 11.1 12.0 11.5 9.8 I 11.4 12.2 11.9 11.2 12.7 II 11.5 12.2 12.0 11.6 12.5 12.2 III 11,5 12.0 11.8 11.5 12.1 11.8 11.3 IV 11.9 12.5 12.4 12.2 12.8 12.8 13.1 15.0 I 12,0 12.5 12.4 12.3 12.8 12.8 13.0 13.9 12.7 II 11.9 12.3 12.2 12.0 12.4 12.4 12.4 12.8 11.7 10.6 III 11.9 12.3 12.2 12.1 12.4 12.4 12.4 12.7 11.9 11.5 12.5 IV 11.9 12.2 12.1 12.0 12.2 12.2 12.4 11.7 11.4 11.7 11.0 10.1 9.7 9.6 9.0 8.5 * * * * *k * * * * * * * * 1978 17 IV Alt. 11.0 11.2 11.1 10.9 11.0 10.8 10.7 10.6 Alt. 10.9 11.1 10.9 10.7 10.8 10.7 10.5 10.4 9.9 9.4 9.3 8.6 8.0 Alt. 10.8 10.9 10.8 10.6 10.7 10.5 10.3 10.2 9.6 9.2 8.9 8.3 7.6 Based on quarterly average data. 3/17/78 CHART 1 MONETARY AGGREGATES NARROW MONEY SUPPLY M 1 BILLIONS OF DOLLARS 350 330 310 I I290 I BROADER MONEY SUPPLY M2 1976 1977 1978 N 1977 D J F 1978 CHART 2 3/17/78 MONETARY AGGREGATES BANK CREDIT SEND BILLIONS OF DOLLARS OF MONTH - 900 - 860 - 820 - 780 740 BILLIONS OF DOLLARS 37 WEEKLY AVERAGES TOTAL - 36 - 35 - 34 II33 1976 1977 1978 CHART 3 3/17/78 MONEY MARKET CONDITIONS AND INTEREST RATES MONEY MARKET CONDITIONS IK PER CENT 7 INTEREST RATES Short-term PER CENT 8 - 6 7 - RESERVES - 6 - 5 BILLIONS OF DOLLARS I 1976 5 1977 1978 1 2 1976 1977 1978 1976 1977 1978 CONFIDENTIAL (FR) CLASS fI-FOMC Table 1 MONETARY AGGREGATES MAR. 17, 1978 ACTUAL AND CURRENT PROJECTIONS, SEASONALLY ADJUSTED Money Supply Broad Narrow Period Total U.S. Govt. 1 CDurces Other avins Total Deposits i (M2) (Ml) Time & Savings Deposits Other Than CDs Total CD's Nondeposit of Funds 2/ 5 3 MONTHLY LEVELS-SBIL 1977--DEC. 1978-JAN. FEB. MAR. t ANNUAL 335.4 337.4 336.3 (337.7) 812.0 814.4 (818.73 10.6 6.1 10.4 6.9 806.5 ( 11.4 9.7 7.5 7.91 471.1 545.8 550.9 557.4 (562.3) 478.0 (481.0) 8.5 15.2 10.4 7.3 252.8 255.2 256.4 (261.5) 218.3 219.4 219.6 (219.5) 474.6 74.7 76.3 79.4 61.6 63.8 66.3 (81.2) GROWTH (UAKTEKLY 1977--3KD OTK. 4TH OTR. ( 2.7) 1978--1ST QTR. 6.1) ( S 8.4) 12.1) ( -4.4 72.8 11.1 13.1 9.6 0.9 (13.8) 2.21 (34.81 OUARTERLY-AV 9.3 6.8 1977-3RD QTR. 4TH QTR. 1978--15T 10.3 3.61 QTR. ( 10.9 10.0 12.9 7.6 6.0) 6.6 4.4 8.1 ( 7.81 ( 3.2 15.0 11.2 2.21 48.2 (47.0) (12.6) ( 13.0) 7.6 7.2 -3.9 5.0) ( 12.2 11.2 14.2 10.5 0.0 6.0 1.1 -0.51 8.1 11.4 15.0 14.4) 64.3 25.7 48.8 27.2) O.5) ( 12.4) 0.3) 14.8) 38.5) MONTHLY 1977--DEC. 1978-JAN. FEB. MAR. FEB.-MAR. MEEKLY LEVELS-$8IL 1978-FEB. MAR. 1 8 15 22 336.0 337.3 336.4 335.9 811.7 814.8 814.2 814.4 9.8 10.0 7.3 6.3 553.0 555.9 556.8 558.3 475.7 477.5 477.8 478.6 219.6 219.7 219.9 219.8 256.1 257.8 257.9 258.8 77.3 78.4 79.0 79.7 70.1 65.0 61.3 69.3 1 8 334.9 335.9 813.5 815.4 6.1 7.3 559.3 561.0 478.6 479.5 219.5 259.1 259.8 80.8 81.3 69.1 -1 NOTE: 1/ 2/ & 4' I 219.7 _ _ __ _ P - PRELIMINARY DATA SHOWN IN PARENTHESES ARE CURRENT PROJECTIONS. INCLUDES TREASURY DEPOSITS AT MEMBER BANKS AND FEDERAL RESERVE BANKS. INCLUDES BORROWINGS FROM OTHER THAN COMMERCIAL BANKS 1N THE FORM OF FEDERAL FUNDS PURCHASED, MENTS TO REPURCHASE, AND OTHER LIABILITIES FOR BORROWED MONEY, PLUS GROSS LIABILITIES TO OWN (EURODOLLAR BORROWINGS), LOANS SOLD TO AFFILIATES, LOAN RP4, AND OTHER MINOR ITEMS. SECURITIES SOLD UNDER AGREEFOREIGN BRANCHES Table 1-A TIME AND SAVINGS DEPOSITS AT ALL COMMERCIAL BANKS SEASONALLY ADJUSTED EXCEPT AS NOTED T im e eriod CLASS-FOMC NAR. 17, 1978 Time Deposits Savings Deposits Total CONFIDENTIAL (FR) Memo: Large and Savings Total Indi al Nonprofit Business (NSA) Government (NSA) Total 1 2 3 4 5 6 7 8 9 514.8 519.5 522.5 525.8 532.2 540.3 545.8 550.9 557.4 212.7 213.6 216.2 217.8 218.4 218.3 218.3 219.4 219.6 196.9 198.6 201.4 203.3 204.2 204.5 204.7 205.a 206.0 9.9 9.9 10.1 10.1 10.0 10.1 10.1 9.7 9.6 6.0 5.0 4.8 4.4 4.2 3.7 3.6 3.9 4.0 302.1 305.9 306.3 308.0 313.9 322.0 327.5 331.5 337.8 137.9 140.8 141.0 142.0 147.2 15o.6 161.8 164.9 170.9 164.2 165.1 165.3 166.0 166.7 165.4 165.7 166.5 166.9 63.9 b2.8 63.2 63.2 66.4 70.9 74.7 76.3 79.4 54.7 16.5 17.5 1.6 -2.5 38.2 24.4 13.7 11.4 1976-IV 14.3 11.6 8.4 1.4 1.9 1.5 -5.6 8.1 -3.1 1977--I II III IV 15.1 10.4 12.7 16.8 10.4 4.4 3.5 2.4 7.1 4.4 4.9 3.4 1.2 0.7 0.1 0.1 2.1 -0.5 -1.6 -0.9 4.7 5.9 9.3 14.4 -0.2 -1.4 0.4 13.9 4.9 7.3 3.0 0.4 0.3 -0.3 0.5 7.6 Large Small Negotiable CD's Denomination Denomination OUTSTANDING (S BILLIONS) 197T--JUNE JULY AUG. SEPT. OCT. NOV. DEC. 1978--JAN. FEB. CHANGES ($ BILLIONS) 1977 YEAR QUARTERLY AVERAGEs MONTHLY AVERAGE: 1977-AUG. 3.0 2.6 2.8 0.2 -0.Z 0.4 0. 0.2 0.4 SEPT. 3.3 1.6 1.9 0.0 -0.4 1.7 1.0 0.7 0.0 OCT. NOV. DEC. 1978-JAN. 6.4 8.1 565 5.1 0.6 -0.1 0.U 1.1 0.9 0.3 0.2 1.1 -0.1 0.1 0.0 -0.4 -0.2 -0.5 -0.1 0.3 5.2 9.4 5.2 3.1 0.7 -1.3 0.3 0.8 3.2 4.5 3.8 1.6 FEB. 6.5 0.2 0.2 -0.1 0.1 5.9 8.1 5.5 4.0 6.3 6.0 0.4 3.1 NOTEI COLUMNS (1)i 12), AND (9) ON THIS TABLE CORRESPOND TO COLUMNS 14), (6), ANO IB), RLSPECTIVELYe ON TABLE 1--MONtTARY AGGREGATES. FIGURES IN COLUMNS (11) (2)1 AND 16) REFLECT DAILY DATA REPORTED BY MEMBER BANKS, WITH ESTIMATES FUK NONMEMBER BANKS DERIVED FROM DATA REPORTED BY SMALL MEMBER BANKS, BENCHMARKED TO NONMEMBER CALL KEPORT FIGURtS. SAVINGS DfPOSITS OF BUSINESS ANU GOVERNMENTAL UNITS-COLUMNS (4) AND (5)-- AND LARGE DENOMINATION TIME DEPOSITS --COLUMN (7)--REFLECT BREAKUOONS REPORTEU EACH WEDNESDAY BY LARGE COMMERCIAL BANKS BLOWN UP TO REPRESENT DEPOSITS AT ALL COMMERCIAL BANKS ON THE BASIS UF CALL KEPURT RELATIONSHIPS. CONFIDENTIAL (F.R.) CLASS II-FOMC TABLE 2 BANK RESERVES ACTUAL AND CURRENT PROJECTIONS, SEASONALLY ADJUSTED MONTHLY 17, 1978 REQUIRED RESERVES BANK RESERVES Total Nonborrowed Monetary Reserves Reserves Base 36,207 36,689 36,941 (36,439) 35,637 36,405 36,536 (36,075) 127,911 129,612 130,179 (130,031) Period MAR. Total Required Private Demand Total Time Deposits 21,454 21,742 21,838 (21,275) 12,854 13,038 13,074 Gov't. and Interbank LEVELS-SMILLIONS 1977--DEC. 1978-JAN. FEB. MAR. PERCENT ANNUAL 36,017 36,623 36,693 (36,186) (13 210) 1,709 1,843 ( 1,701) GROWTH QUARTERLY 1977-3RD QTR. 4TH QTR. 1978--1ST QTR. ( 2.6) t 10.2 6.8 4.6 7.3 8.8 6.5 S 6.6) .9) 2.6 15.0 13.2 3.3 8.1 o.a (-3.3) 1.9) ( 11.1) QUARTERLY-AV 1978-1ST QTR. ( 8.0) 9.6 6.7 3.4 2.9 9.0 5.6 1977-3RD QTR. 4TH QTR. ( 13.8) ( 8.6 5.6 9.3) ( 6.3 6.6 10.2 4.9 ( 3.61 7.6)1 ( 14.4) MONTHLY 1977--DEC. 1978--JAN. FEB. MAR. 6.6 22.6 1.7 -16.3) FEB.-MAR. -7.3) 16.7 25.9 4.3 (-15.1) 1 ( 4 -5.4) 9.1 16.0 5.3 -1.4) 1.9) 8.7 20.2 2.3 -16.6 ( ( -7.2) ( 1.0 16.1 5.3 -30.9) I -12.9) 19.7 17.2 3.3 12.5) 7.9) WEEKLY LEVELS-SMILLIONS 1978-FEB. MAR. NOTEt 36,363 36,869 36,823 36,322 129,928 130,178 130,1t0 130,336 36,675 22 36,833 37,362 37,104 36,768 1 8 15 36,479 36,251 36,298 36,089 35,855 36,050 130,040 129,413 129,482 36,327 35,937 36.142 1 6 15 RESERVE SERIES HAVE BEEN ADJUSTED TO REMOVE DISCONTINUITIES DATA SHOMN IN PARENTHESES ARE CURRENT PROJECTIONS. 36,992 36,926 36,476 ASSOCIATED WITH CHANGES 21,834 22,108 22,160 il,427 21,627 21,142 21.153 13,011 13,025 13,054 13,117 1,830 1,859 1,712 1,931 13,117 13,145 13,192 1,584 1,650 IN RESERVE REQUIREMENT 1,798 RATIO. TABLE 3 NET CHANGES IN SYSTEM HOLDINGS OF SECURITIES-' ($ million, not seasonally adjusted) Treasury Coupons Net Purchases 3/ Treasury Bills Net Change 2/ Within 1 year -490 7,232 1,280 -468 863 4,361 1976--Qtr. IV -886 1977--Qtr. I 1,164 2,126 886 186 Qtr. II Qtr. III Qtr. IV 1977--Sept. Dec. -1,877 -736 2,798 1978--Jan. Feb. -627 -2,695 Nov. 1978--Jan. 4 11 18 25 Feb. 1 8 15 22 1 8 15 22p 29 5 - 10 Over 10 Total 789 579 797 3,284 3,025 2,833 539 500 434 1,510 1,048 758 167 129 196 1,070 642 553 1,582 1,415 1,747 6,202 5,187 4,660 794 232 192 1,294 Within 1 year 1- Federal Agencies Net Purchases 4/ Over 5 5 - 10 10 592 400 1,665 824 469 792 -41 37 36 Total 681 56 311 96 128 108 1,001 89 100 556 -1,358 -46 -154 1,272 3,607 -2,892 115 436 304 2,738 3,666 4,273 -643 -4,881 -- -- -- -- -860 -275 -1,358 -200 S -248 448 275 54 - Net RP's 6/ 1,631 9,273 6,303 7,267 6,227 10,035 1,021 .66 Net Change Outright Holdings Total 5/ 1,059 864 3,082 1,613 891 1,433 1,680 959 1,021 1,001 1,385 Oct. Mar. 77 5 1- STRICTLY CONFIDENTIAL (FR) CLASS II - FOMC MARCH 17, 1978 -4,771 4,175 -2,331 34 1,883 -4,380 -736 4,474 -6,530 2,996 3,568 -- --- ---- -- -- -2,717 -7,149 4,141 -9 -347 696 440 -4,526 -7,893 5,232 -2,239 5,009 -5,745 4,629 2,408 71 --- ----- ---882 ---275 --- ---- ----1,358 -- --- -- 862 - - 351 -- -- -- -44 ----200 -1,474 -4,050 612 1,024 9.6 7.6 59.9 LEVEL--Mar. 15 1.4 4.0 1.6 .9 7.9 107.8 (in billions) i Change from end-of-period to end-of-period. Outright transactions in market and with foreign accounts, and redemptions (-) in bill auctions. Outright transactions in market and with foreign accounts, and short-term note s acquired in exchange for maturing bills. Excludes redemptions, maturity shifts, rollovers of maturing coupon issues, and direct Treasury borrowing fro m the System. Outright transactions in market and with foreign accounts only. Excludes redeInptions and maturity shifts. In addition to net purchases of securities, also reflects changes in System ho Ldings of bankers' acceptances, direct Treasury borrowings from the System, and redemptions (-) of Agency and Treasury coupon issues. Includes changes in both RP's (+) and matched sale-purchase transactions (-). TABLE 4 STRICTLY CONFIDENTIAL CLASS II - FOMC MARCH 17, 1978 SECURITY DEALER POSITIONS AND BANK POSITIONS (millions of dollars) U.S. Govt. Security Dealer Positions Underwriting Syndicate Positions Municipal Corporate Bonds Bonds OFR) Member Bank Reserve Positions Basic Reserve Deficit** Borrowing at FRB** Excess** ' Reserves 8 New York 38 Others -12,744 - 6,908 Bills Coupon Issues 1976--High Low 8,896 3,668 3,046 175 1977--High Low 7,234 1,729 3,017 -1,445 1977--Feb. Mar. 4,450 4,906 1,650 972 198 214 72 103 4,567 696 123 206 192 73 206 262 -6,586 -5,693 -309 -933 -313 275 200 209 323 1,084 -6,391 -5,581 626 -7,333 -360 610 804 210 1,305 -6,480 251 193 863 -6,971 -7,403 -11,511 -11,825 -11,350 -6,047 7 -5,00 p -12,299 -12,558p -6,675 -7,699 -6,352 -5,496 - 8,533 -13,055 -13,938 -12,729 185 292 -3,993 -5,056 -4,906 -5,241 -11,516 -13,137 -13,295 -12,344 152p 314p 148p -4,962p -7,142p 49 7 -7, p -11,444p -11,527p -11,606p 3,072 4,752 July Aug. Sept. 3,899 2,533 4,812 4,142 3,617 4,257 1978--Jan. Feb. Mar. 242 24 -8,161 513 1,861 -9,151 -4,234 -13,975 -5,604 -11,503 -10,912 -111 213 154 327 *1,492 293 197 268 4 11 18 25 4,416 5,625 3,565 3,167 1,247 369 -221 365 316 284 287 1 8 15 22 3,599 4,127 1 8 15 22 29 3,842 4,128 *3,185 *2,176 *2,807 *2,923 273 297 315 674 2,043 1,264 *968 154 158 370 *1,577 *1,290 *891 253 210 236p -2,367 20 12 13 -5,661 -5,341 570 269p 313 261 151 251 231 Seasonal 655 -180 *3,418 1978--Jan. Feb. Total 32 50p - 8,206 -11.409 -10,175 -10,332 -11,012 -11,452 -11,120 NOTE: Government security dealer trading positions are on a commitment basis. Trading positions, which exclude Treasury securities financed by repurchase agreements maturing in 16 days or more, are indicators of dealer holdings available for sale over the near-term. Underwriting syndicate positions consist of 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. TABLE 5 STRICTLY CONFIDENTIAL (FR) CLASS II - FOMC MARCH 17, 1978 SELECTED INTEREST RATES (per cent) Treasury Federal 90-day Funds ' 2) (1) Short-Term Bills CD's New Issue-NYC 90-Day 1-Year (4) (3) Comm. Paper 90-119 Day (5) Bank Prime Rate (6) U.S. Govt.-Constant Maturity Yields 20-yr 7-yr 3-yr (8) (9) (7) Long-Term Corp.-Aaa Utility Municipal Bond Recently New Buyer Offered Issue (11) (12) (10) Home Mortgages Secondary Market Primary FNMA Auc. IGNMA Sea Cony. (15) (14) (13) 1976--High Low 5.58 4.63 5.53 4.27 6.32 4.62 5.75 4.50 5.90 4.63 7.25 6.25 7.52 5.65 7.89 6.33 8.17 7.23 8.95 7.93 8.94 7.84 7.13 5.83 9.10 8.70 9.20 8.39 1977--High Low 6.65 4.47 6.27 4.41 6.62 4.67 6.70 4.50 6.66 4.63 7.75 6.25 7.39 5.83 7.70 6.59 7.99 7.26 8.36 7.90 8.48 7.95 5.93 5.45 9.00 8.65 8.98 8.46 1977--Feb. Mar. 4.68 4.69 4.67 4.60 5.16 5.19 4.70 4.72 4.76 4.75 6.25 6.25 6.44 6.47 7.16 7.20 7.64 7.73 8.22 8.25 8.19 8.29 5.89 5.89 8.67 8.69 8.55 8.68 Apr. May June 4.73 5.35 5.39 4.54 4.96 5.02 5.10 5.43 5.41 4.67 5.16 5.35 4.75 5.26 5.42 6.25 6.41 6.75 6.32 6.55 6.39 7.11 7.26 7.05 7.67 7.74 7.64 8.26 8.33 8.08 8.22 8.31 8.12 5.73 5.75 5.62 8.75 8.83 8.86 8.67 8.74 8.75 7.96 8.04 7.95 July Aug. Sept. 5.42 5.90 6.14 5.19 5.49 5.81 5.57 5.97 6.13 5.28 5.78 6.01 5.38 5.75 6.09 6.75 6.83 7.13 6.51 6.79 6.84 7.12 7.24 7.21 7.60 7.64 7.57 8.15 8.04 8.07 8.12 8.05 8.07 5.63 5.62 5.51 8.95 8.94 8.90 8.72 8.76 8.74 7.96 8.03 8.02 Oct. Nov. Dec. 6.47 6.51 6.56 6.16 6.10 6.07 6.52 6.52 6.52 6.53 6.56 6.65 6.51 6.54 6.61 7.52 7.75 7.75 7.19 7.22 7.30 7.44 7.46 7.59 7.71 7.76 7.87 8.23 8.28 8.34 8.22 8.25 8.38 5.64 5.49 5.57 8.92 8.92 8.96 8.82 8.86 8.94 8.16 8.19 8.27 1978--Jan. Feb. 6.70 6,78 6.44 6.45 6.80 6.86 6.82 6.77r 6.75 6.76 7.93 8.00 7.61 7.67 7.86 7.94 8.14 8.22 8.68 8.69 8.60 8.67 5.71 5.62 9.02 9.15 9.17 9.31 8.56 8.64 4 11 18 25 6.69 6.58 6.78 6.72 6.16 6.48 6.50 6.46 6.55 6.81 6.87 6.83 6.65 6.87 6.87 6.88 6.68 6.69 6.80 6.79 7.75 7.82 8.00 8.00 7.40 7.71 7.66 7.65 7.72 7.93 7.89 7.89 8.01 8.18 8.16 8.17 8.48 5.64 9.00 8.65 5.75 9.03 8.65 5.74 8.98 8.62 5.70 9.05 1 8 15 22 6.80 6.75 6.76 6.78 6.42 6.44 6.46 6.48 6.80 6.83 6.86 6.91 6.81 6.75 6.75 6.75 6.76 6.76 6.76 6.78 8.00 8.00 8.00 8.00 7.58 7.62 7.71 7.74 7.85 7.91 7.99 7.99 8.17 8.20 8.25 8.25 8.65 8.69 -8.71 8.60 8.64 8.68 8.70 5.63 5.59 5.61 5.65 9.13 9.15 9.15 9.15 1 6.80 6.76 6.77 6.41 6.33 6.27 6.85 6.83 6.81 6.75 6.75 6.73 6.75 6.75 6.75 8.00 8.00 8.00 7.71 7.69 7.64p 7.95 7.94 7.91p 8.21 8.21 8.17p 8.70 8.70 5.63 5.58 5.58 9.15 9.15 n.a. 6.76 6 .75p 6.25 6.25 6.81 6.79 8.00 8.00 7.68 6 7. 4p 7.95 7.91p 8.20 8.17p 1978--Jan. Feb. Mar. 8 15 22 29 Daily--Mar. 9 16 -6.75 -6.75 - 8.70 8.68 - - 8.65 8.64p 9.13 9.21 9.27 9.35 8.43 8.54 8.60 8.59 8.62 8.62 8.65 8.68 NOTE: Weekly data for columns 1, 2, 3, 5, and 6 are statement week averages of daily data. Data in column 4 are 1-day Wednesday quotes. For columns 7 through 10, the weekly date is the mid-point of the calendar week over which data are averaged. Columns 11 and 12 are 1-day quotes for Friday and Thursday, respectively, following the end of the statement week. Column 13 is an average of contract interest rates on commitments for conventional first mortgages with 80 per cent loan-to-value ratios made by a sample of insured savings and loan associations on the Friday following the end of the statement week. Column 14 gives FNMA auction data for Monday preceding the end of the statement week. Column 15 is a 1-day quote for Monday preceding 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. GNMA yields are average net yields to investors on mortgage-backed securities tor immediate delivery, assuming prepayment in 12 years on pools of 30-year FHA/VA mortgages carrying the coupon rate 50 basis points below the current FHA/VA ceiling. MAR. 17, 1978 AWppedi Tale 1-A MONEY AND CREDIT AGGREGATE MEASURES Revised Series i _ _ 8k lerwvIYs __,,P,_ _ Total Nonborrowed I 2 Monetary Base Loans and Investmrnts My M2 (PIER CENT .ANNU ANNUALLY: 1975 1976 1977 -0.2 1.0 5.2 3.2 1.2 2.7 5.9 7.0 8.3 __,,, I total Period _ Mseeey Saks* Measures I 3.9 8.0 10.9 4.4 5.7 7.8 8.9 3 M4 MS M6 *1 9 10 M7 RATES OF SOWTN) C.3 10.9 .8 11.1 12.8 11.7 6.5 7.1 10.0 9. 10.3 11.7 10.4 10.0 11.4 10.0 10.2 11.4 5.5 10.8 12.7 7.8 10.8 10.0 10.1 1 SEMI-ANNUALLY: 2ND HALF 1976 3.5 3.6 1ST HALF 2ND HALF 1977 1977 2.9 7.3 2.3 3.1 7.9 8.4 II- 7.6 7.7 10.1 9.0 11.3 11.4 9.3 10.2 10.8 12.0 10.7 11.6 10.9 11.4 1977 1977 1977 1977 -1.6 6.5 8.9 6.1 -2.2 4.7 4.7 6.8 5.1 8.9 9.5 9.3 10.6 12.6 8.6 8.3 7.3 7.7 6.2 10.0 8.5 10.1 7.0 11.3 9.9 12.7 9.1 9.0 8.4 9.6 11.2 10.6 9.8 12.3 11.6 11.4 9.6 11.7 11.2 11.7 9.8 11.5 11.1 2.7 3.i 8.9 5.7 2.6 2.0 3.3 3.0 6.7 8.9 7.7 8.9 9.5 13.3 9.6 9.3 6.9 8.1 6.1 7.2 10.9 9.0 9.9 8.0 12.2 10.2 11.9 10.6 10.2 8.2 9.5 10.7 11.7 9.6 11.6 12.1 11.4 9.6 11.1 11.7 11.5 10.0 10.9 11.5 15.9 10.9 15.7 12.0 9.6 9.5 12.3 3.8 13.5 11.8 -0.7 5.3 7.6 13.9 1.1 7.6t 11.5 6.2 8.7 10.9 0.4 7.2 9.2 9.6 10.8 5.3 9.4 13.3 7.7. 9.0 9.7 5.4 5.7 10.7 10.4 11.0 8.0 10.5 13.9 11.7 12.2 11.8 7.8 7.6 8.6 7.4 9.1 6.6 9.2 11.7 7.5 9.2 12.5 11.2 9.6 10.3 6.9 9.9 8.8 10.4 12.8 11.5 12.2 13.3 11.3 9.8 12.9 8.5 9.4 8.9 10.2 12.0 10.9 11.8 12.8 11.0 9.6 13.2 9.2 9.7 9.1 10.2 11.6 10.8 11.6 12.6 10.8 9.5 12.1 10.1 9.6 -1.1 8.9 4.4 8.6 5.2 11.3 6.2 10.1 7.5 9.9 7.5 9.8 7.5 16.9 QUARTERLY: 1ST 2ND 3RD 4TH QTR. QTR. QTR. QTR. b.9 QUARTERLY-AV: 1ST 2ND 3RD 4TH QTR. QTR. QTR. OTR. 1977 1977 1977 1977 MONTHLYs 1977--FEB. MAR. APR. NAY JUNE JULY AUG. SEPT. OCT. NOV. DEC. -12.4 -3.1 12.5 2.8 4.2 15.4 10.7 0.3 8.5 4.3 5.4 -12.6 -4.2 13.6 -1.8 2.3 13.5 -14.5 15.4 -14.6 19.8 15.5 -1.0 5.3 1978--JAN. FEI.P 22.4 2.8 25.7 5.4 15.5 1/ 2/ P - 17.6 8.5 0.3 11.1 9.2 7.9 9.6 7.8 10.3 4.7 BASED ON DATA ADJUSTED FOR CHANGES IN RESEkVE BASED ON QUARTERLY AVERAGE DATA. PRELIMINARY REQUIKREMNTS. MAR. 17, 1978 AppedWi Tahe 1-8 MONEY AND CREDIT AGGREGATE MEASURES SEASONALLY ADJUSTED, BILLIONS OF DOLLAfR Revised Series hok Reserves 1/ Period TPero Total Nonborrowed Monetary Base Moy Stock Measures Bank CmWt Total Tol Loans and M1 M2 3 M4 MS M7 M6 investments ___ 1- '------ ANNUALLY: 36,189 33,865 34,395 35,619 110,371 118,070 128,019 725.5 ?bb.k 76b.2 870.0 294.5 312.6 336.7 664.1 739.6 807.6 1091.8 1235.6 1374.1 745.4 802.3 b81.6 1173.2 1298.3 1448.1 1306.7 1437.1 1601.1 1349.5 1486.7 1657.0 1977--FEB. MAR. 34,401 34,312 34,330 34,209 119,040 119,566 b01.8 316.3 318.3 752.1 758.1 1259.7 1270.6 815.3 820.3 1323.0 1332.8 1467.5 809.1 1477.9 1518.6 1530.2 APR. MAY JUNE 34,669 34,751 34,873 34,596 34,545 34,610 121,319 122,180 122,214 819.7 827.9 834.5 322.0 322.3 324.4 764.9 768.3 774.3 1282.2 1290.8 1302.1 826.5 831.2 837.6 1343.8 1353.7 1365.4 1489.5 1500.5 1513.2 1542.6 1554.3 1567.5 JULY AUG. SEPT. 35,321 35,636 35,646 34,998 34,576 35,020 123,344 124,291 125,113 841.1 852.4 327.5 329.2 331.6 782.9 787.9 793.8 1317.2 1330.0 1343.5 845.8 651.1 857.6 1380.0 1393.2 1407.4 1528.3 1542.2 1557.4 1582.7 1596.9 1612.4 LT. NOV. DEC. 35,898 36,027 36,189 34,593 35,165 35,619 126,115 126,934 128,019 *62.0 b70.5 870.0 334.6 334.7 336.7 800.2 803.8 807.6 1356.7 1365.5 1374.1 866.5 674.6 881.6 1423.0 1436.4 1448.1 1574.0 1588.4 1601.1 1629.3 1644.0 1657.0 1978--JAN. FEb.P 36,865 36,951 36,381 36,546 129,673 130,177 876.8 339.4 339.1 813.6 816.6 1384.0 1390.0 889.9 896.0 1460.3 1469.4 1614.3 1624.4 1670.5 1680.9 11 16 25 36,172 37,517 36,917 35,730 37,099 36,325 128,848 130,245 129,806 336.7 339.5 339.6 612.4 814.0 814.6 888.0 890.0 891.3 1 b 15 22 36,845 37,375 37,122 36,770 36,376 36,882 36,841 36,324 129,885 130,279 130,306 130,146 Z39.2 339.4 338.9 339.4 814.5 816.4 816.1 817.5 892.2 894.9 895.1 897.2 IP 36,487 36,261 36t097 35,865 129,994 129,487 339.4 339.1 817.5 818.4 898.4 900.3 1975 1976 1977 33,995 34,448 MONTHLY: 849.7 88b.; WEEKLY: 1978-JAN. FEB. MAR. uP WEEKLY DATA ARE DAILY AVERAGES FOR STATEMENT WEEKS. MONTHLY DATA ARE DAILY AVERAGES. EEKLY DATA ARE M3, M5, M6b M7, TOTAL LOANS AND INVESTMENTS AND THRIFT INSTITUTION DEPOSITS. 1/ bASEU UN DATA ADJUSTED FOR CHANGES IN RESERVE RE.UIREMENTS. DATA SHOWN IN MILLIONS OF DOLLARS. P - PRELIMINARY MOTES: NOT AVAILABLE FOR MAR. APPENDIX TABLE 2-A 7 1978 COMPONENTS OF MONEY STOCK AND RELATED MEASURES Revised Series Mutual Savings Bank & Shares / Time and Savings Deposits Period nd Demand Deposits Currency Tol Total 1 2 3 4 8.9 9.6 9.5 3.0 4.4 7.2 7.9 a.0 11.4 11.7 7.8 4.7 9.3 8.7 9.8 7.2 7.0 8.4 9.2 9.5 10.2 6.5 Other Than CD's Savings Other C 5 6 7 8 (Per cent annual rates of growth) Credit Union Savings 9 10 Other Short Term Private U.S.Govt Short-term Asse1 1/ 11 12 ANNUALLY: 1975 1976 1977 11.2 17.5 25.0 10.5 7.8 7.5 11.8 -23.4 12.8 15.3 15.5 14.2 14.9 19.8 10.7 -21.7 10.4 11.8 11.9 9.9 15.0 5.6 9.0 14.0 0.6 24.9 6.9 7.1 8.7 4.7 10.0 8.9 9.9 14.5 12.0 9.2 7.6 16.3 5.1 9.6 0.9 8.2 12.9 12.0 13.6 6.4 7.8 7.7 6.2 12.2 8.3 10.3 13.0 13.7 9.7 11.2 8.5 21.1 8.5 6.6 4.4 7.2 10.7 7.2 6.0 10.5 10.1 11.9 8.3 9.2 13.7 18.3 10.9 12.0 11.0 8.5 8.4 10.5 14.9 8.4 10.4 10.9 4.5 0.0 5.1 8.6 9.3 4.6 8.9 3.3 -0.5 0.0 12.3 b.4 8.4 6.0 1.1 15.0 19.5 18.8 19.4 33.4 7.5 9.9 -1.0 19.2 12.1 15.5 18.1 -1.4 15.2 12.9 14.5 16.6 20.6 12.5 6.8 16.5 7.1 -3.2 7.1 3.2 64.0 13.0 11.6 11.6 17.4 15.7 21.7 18.8 31.1 8.3 4.9 8.1 20.9 15.3 5.2 6.5 3.2 -1.9 4.5 13.9 11.6 14.6 13.9 17.6 14.9 2U. 20.11 20.0 11.1 5.5 8.1 12.9 19.5 7.4 6.6 12.7 11.0 68.9 5.0 3.3 11.6 9.9 0.0 6.5 8.1 8.1 8.0 7.9 21.5 28.2 18.4 15.8 11.2 2.2 6.6 6.6 6.5 6.5 6.5 7.9 7.8 6.4 6.4 -6.4 SENI-ANNUALLY: 2ND HALF 1976 1ST HALF 1977 2ND HALF 1977 QUARTERLY: 1ST 2ND 3RD 4TH QTR. QTR. QTR. QTR. 1977 1977 1977 1977 10.8 16.2 QUARTERLY-AV; 1LT 2NO 3RD 4TH QTR. QTR. QTR. QTR. 1977 1977 1977 1977 8.8 9.1 10.3 10.7 15.6 12.0 44.9 13.6 MONTHLY: 1977--FEB. MAR. APR. MAY JUNE JULY AUG. SEPT. OCT. NOV. DEC. 8.9 7.3 10.2 8.7 8.6 11.4 11.2 11.1 8.3 10.9 4.1 7.7 15.3 -1.5 7.5 11.0 6.9 7.9 10.8 -2.4 5.8 1978--JAN. FEB.P 10.8 9.4 9.2 -4.8 5.6 a 14.0 9.6 11.6 6.3 11.9 14.6 I 10.9 -9.5 14.3 7.6 11.4 48.9 81.3 52.5 17.1 16.6 11.0 9.3 10.5 37.3 14.6 48.8 7.4 5.7 17.9 12.6 23.8 3.0 8.9 13.8 18.5 8.1 14.6 6.9 -11.6 25.3 7.6 18.1 14.9 14.7 14.5 17.2 19.8 19.5 24.7 21.5 15.8 18.2 20.1 I 1/ GROWTH RATES ARE BASED ON ESTIMATED MONTHLY AVERAGE LEVELS DERIVED PREVIOUS MONTH REPORTED DATA. 2/ BASED ON QUARTERLY AVERAGE DATA. 3.8 -20.9 11.6 12.0 14.0 L _________________ I a_________________ I BY AVERAGING END OF CURRENT MONTH AND END OF APPENDIX TABLE 23- MAR. 17, 1978 COMPONENTS OF MONEY STOCK AND RELATED MEASURES Revised Series; Time and Savins D.oselts Mutual sd sead loving@ Depositsanl Currency Demand Deposits Period Dot Credit Ban" & S&L Shares __ Totl Ta Other Than CDs Other ISavings Total Union SavinIs Shares Bonds i 1 Short- Other Term U.S Gov't Sec j Private 1 2 3 4 5 6 7 8 9 10 73.7 80.7 88.5 220.8 231.9 248.2 450.9 469.7 544.9 369.6 427.0 470.9 160.5 Z01.8 218.3 209.1 225.2 252.6 81.3 62.7 74.0 394.8 456.9 519.7 33.0 39.1 46.8 67.3 71.9 77.0 76.0 81.9 62.4 234.4 235.9 499.0 502.0 435.8 439.8 208.2 210.0 227.6 229.8 63.3 62.2 467.4 471.7 40.3 40.8 72.7 73.0 APR. MAY JUNE 83.1 83.7 84.3 238.9 238.6 240.1 504.5 442.9 446.0 211.9 212.7 231.0 233.3 449.9 212.7 237.2 61.6 62.9 63.3 476.0 480.6 485.4 41.3 41.0 42.4 JULY AUG. SEPT. 85.1 242.3 243.7 245.3 518.3 521.9 525.9 455.5 45b.7 462.1 213.6 491.2 498.2 505.1 43.1 216.2 217.8 241.9 242.5 244.3 62.8 85.5 86.3 OCT. 87.1 67.7 86.5 247.5 247.0 248.2 531.9 540.0 544.9 465.5 218.4 218.3 218.3 247.1 250.9 252.6 66.4 469.1 470.9 511.0 515.7 519.7 09.3 90.0 250.1 249.1 550.5 556.9 474.2 477.5 219.4t 219.6 254.8 257.9 76.3 79.4 89.1 249.6 250.3 250.4 549.3 550.5 551.5 473.7 474.5 474.6 220.0 219.9 219.9 253.7 254.9 75.5 76.0 76.7 89.9 90.0 90.2 249.6 249.5 248.9 249.3 553.0 555.4 556.2 557.8 475.3 477.0 477.2 478.1 219.6 219.7 255.7 257.2 257.3 258.3 90.2 90.3 249.2 248.8 559.0 561.2 478.2 479.3 219.5 258.7 259.6 Non- 11 12 66.3 42.6 66.9 49.7 Total Gov't Deposit Fund Demand S Deposit Shortterm Assets I 13 ANNUALLY: 1975 1976 1977 55.9 33.7 51.4 61.6 8.3 11.2 11.4 71.8 72.1 51.1 52.3 50.3 51.4 11.7 11.2 73.4 73.6 74.2 72.3 73.0 73.6 53.1 53.8 54.3 50.8 54.6 53.5 10.8 10.6 10.1 43.8 44.7 74.6 75.0 75.5 73.6 74.0 54.4 54.7 55.0 53.3 55.6 57.7 11.8 10.2 10.7 45.5 76.0 75.0 46.1 46.6 76.5 75.5 77.0 76.0 55.3 55.6 55.9 57.4 60.0 61.6 10.3 6.7 11.4 47.5 48.0 77.5 76.0 76.5 77.0 56.2 56.5 63.8 66.3 9.7 7.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 65.2 62.5 64.4 10.4 9.3 9.3 77.6 76.5 79.0 79.7 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 70.1 65.0 61.3 69.3 9.8 10.0 7.3 6.3 80.9 81.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 69.1 6.1 7.3 MONTHLY: 1977--FEb. MAR. NOV. DEC. 1978--JAN. FEB.P 508.9 513.2 63.2 63.6 70.9 74.0 522.9 525.4 74.5 WEEKLY: 1978-JAN. FEB. MAR. 1/ 2/ 3/ 4/ P - 11 1b 25 1 8 15 22 IP 8P 89.3 89.4 89.6 219.9 219.8 219.7 254.7 ESTIMATED MONTHLY AVERAGE LEVELS DERIVED BY AVERAGING END OF CURRENT MONTH AND END OF PktVIOUS MONTH REPORTED DATA. INCLUDES PRIVATE DOMESTIC NONFINANCIAL INVESTURS' HOLDINGS OF COMMERCIAL PAPER, BANKERS ACCEPTANCES, SECURITY RP'S AND MONEY MARKET MUTUAL FUND SHARES. BORROWINGS BY BANKS FROM OTHER THAN COMMERCIAL BANKS IN THE FORM OF FEDERAL FUNDS PURCHASED, SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE, AND OTHER LIABILIT1tS FUR bORROMED MONEYt PLUS GROSS LIABILITIES TO OWN FOREIGN BRANCHES (EURODOLLAR BORROWINGS), LOANS SOLD TO AFFILIATES, LOAN RPS, AND OTHER MINOR ITENS. INCLUDES TREASURY DEPOSITS AT MEMBER BANKS AND FEDERAL RESERVE BANKS. PRELIMINARY
@FedFRASER