The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
Prefatory Note The attached document represents the most complete and accurate version available based on original copies culled from the files of the FOMC Secretariat at the Board of Governors of the Federal Reserve System. This electronic document was created through a comprehensive digitization process which included identifying the bestpreserved paper copies, scanning those copies, 1 and then making the scanned versions text-searchable. 2 Though a stringent quality assurance process was employed, some imperfections may remain. Please note that some material may have been redacted from this document if that material was received on a confidential basis. Redacted material is indicated by occasional gaps in the text or by gray boxes around non-text content. All redacted passages are exempt from disclosure under applicable provisions of the Freedom of Information Act. 1 In some cases, original copies needed to be photocopied before being scanned into electronic format. All scanned images were deskewed (to remove the effects of printer- and scanner-introduced tilting) and lightly cleaned (to remove dark spots caused by staple holes, hole punches, and other blemishes caused after initial printing). 2 A two-step process was used. An advanced optical character recognition computer program (OCR) first created electronic text from the document image. Where the OCR results were inconclusive, staff checked and corrected the text as necessary. Please note that the numbers and text in charts and tables were not reliably recognized by the OCR process and were not checked or corrected by staff. Content last modified 6/05/2009. CONFIDENTIAL (FR) March 3, 1967 MONEY MARKET AND RESERVE RELATIONSHIPS Recent developments The past four weeks were marked first by a sharp upward movement of long-term bond yields and a tightening of short-term markets, and then later in the period by a return to easier money market conditions and some downward re-adjustment in long-term rates. Expectational as well as supply-demand factors had an important bearing on the rate movements. Concern about the viability of prevailing interest rate levels developed early in the period as many narket observers concluded that monetary policy had stopped trending toward ease, as a large and continuing build-up in bond issues came to market, and as security dealers made efforts to lighten inventories. In consequence, the yield on new high grade corporate issues rose from a little over 5 per cent at the time of the last FOMC meeting to around 5.50 per cent, while outstanding 20 year U.S. Government bonds rose from 4.50 to 4.70 per cent. Toward the end of February, bearish bond market expectations were moderated byTreasury trust account purchases of coupon issues for debt limit purposes and by System open market operations, leading to the development of a Federal funds rate fluctuating below 5 per cent, with trading most frequently in a 4-1/2 - 4-3/4 per cent range. And FINANCIAL MARKET RELATIONSHIPS IN PERSPECTIV Period (Monthly averages and, where available, weekly averages of daily figures) Money arket Indicators Bond Yields Flow of Reserves. Bank Credit and Money Free BorrowFederal 3-month Corporate MuniciNonTotal Bank teserves ings Funds TreasU.S. New pal borrowed ReCredit Supy Deposits (In millions Rate ury Gov't. Issues (Aaa) Reserves serves Proxy of dollars) Bill (20 y.) (Aaa)1/ (I? Wion (In billions of dollars) (Seasonally Adjusted) 1 eo Supply Deposits 1966--Feb. Mar. Apr. May -117 -210 -277 -339 474 545 638 653 4.58 4.64 4.64 4.83 4.65 4.58 4.61 4.63 4.71 4.72 4.65 4.69 4.96 5.09 5.03 5.16 3.48 3.55 3.46 3.53 + 58 - 88 +206 + 1 + 78 + 57 +256 + 6 + + + + June July -352 -359 722 439 5.13 5.18 4.50 4.78 4.73 4.84 5.35 5.48 3.60 3.77 - 16* +135* + 3* +224* + 0.9* + 2.1* Aug. -374 740 5.45 4.95 4.95 5.64 3.91 -302 -400 - 0.7 Sept. -390 765 5.30 5.36 4.94 5.82 3.93 + 5 +129 - 0.1 + 0.9 + 0.4 Oct. Nov. -425 -235 766 605 5.46 5.75 5.33 5.31 4.83 4.88 5.70 5.71 3.82 3.78 -134 +108 -195 - 35 - 0.7 - 1.1 - 0.9 - 0.4 - 0.3 + 0.1 Dec. -196 529 5.39 4.96 4.76 5.73 3.79 + 21 + 21 + 0.9 + 1.1 + 1.2 - 64 + 37 +149 - 37 - 40 + 76 + 4 476 366 176 353 456 477 167 4.87 4.99 4.20 5.00 5.13 5.19 4.65 4.72 4.56 4.55 4.51 4.58 4.61 4.56 4.51 4.61 4.48 4.52 4.60 4.67 4.70 5.43 5.18 -5.09 5.16 5.20 5.46 3.74 3.62 3.55 3.54 3.67 3.70 3.53 +489 +360 +327 +273 + + + + + + + + + + - + + + + + + + 1967--Jan. p Feb. p 1967--Feb. Ip 8p 15p 22p Mar. lp Averages 0.7 1.1 3.1 1.0 3.3 3.0 1.0 1.2 0.1 0.3 0.1 + + + - 0.2 0.9 1.6 0.7 + 0.9 - 1.5 -- 0.6 0.9 0.1 0.5 0.6 1.9 0.3 + + + + 0.7 1.0 1.9 1.6 + 1.5* + 1.9* + 1.4 2.4 2.7 1.0 0.5 0.6 0.5 0.2 Annual rates of increase 3/ Year 1966 First Half 1966 -283 -228 672 581 5.06 4.69 4.85 4.59 4.77 4.67 5.41 5.12 3.67 3.51 + 0.8* + 3.0* + 1.2* + 4.6* + 3.7* + 7.1* + 1.9 + 4.7 + 8.4* +10.3* Second Half 1966 -338 763 5.39 5.12 4.87 5.74 3.83 - 1.5* - 2.2* + 0.3* - 0.9 + 6.1* Recent variations in growth July 6-Aug. 10 Aug. 10-Nov. 16 Nov. 16-Mar. 1 -345 -320 - 88 738 638 448 5.32 5.46 5.13 4.81 5.27 4.82 4.85 4.91 4.66 5.55 5.78 5.42 3.80 3.87 3.61 - 4.2 - 2.7 +11.1 -13.4 + 0.4 + 5.7 +12.7 + 1.4 +15.1 I/ From January 1966 to date, issues carry a 5-year call protection. 2/ Time deposits adjusted at all commerical banks. 3/ Base is average for month preceding specified period or in case of weekly periods, the first p- Changes have been adjusted for redefinition of time deposits effective June 9, 1966. Preliminary. week shown. March 3, 1967. CONFIDENTIAL (FR) -2- March 3, 1967. a more bullish market psychology materialized with the announcement of a reduction in reserve requirements on savings deposits and on the first $5 million of time deposits. Government bond yields appear to have retraced about half their previous rise, but the response in the corporate market has been more sluggish. As open market operations attempted to moderate rising interest rates in February, nonborrowed reserves rose by an 18.5 per cent annual rate on average. Banks used part of these funds to reduce borrowings from the Federal Reserve. Required reserves did grow rapidly, however, and supported a 15 per cent rate of expansion in total member bank deposits (the bank credit proxy), with most of the rise occurring early in the month. Inclusion of repayments of member bank borrowings from abroad would reduce the bank credit proxy expansion to about 13-14 per cent on average last month. Despite the rapid aggregate reserve expansion and even with the net reserve position of banks averaging just about zero during the four weeks ending March 1, the money market remained relatively taut for much of the period. Member bank borrowings from the Federal Reserve averaged $360 million. Federal funds traded at an average rate of around 5-1/8 per cent until the last few days. The vicissitudes of the Federal funds market were reflected in the 3-month bill rate. It rose to a peak of 4.64 per cent on February 23, and then dropped to 4.54 per cent on February 28. Following the reserve requirement reduction announcement, the rate fell to a new 1967 low of below 4.40 per cent. CONFIDENTIAL (FR) -3- March 3, 1967. The tautness of the Federal funds market over the first three weeks of February partly reflected the development of somewhat larger basic reserve deficiencies at major New York City banks than is usual for this time of year. At the same time, funds supplied to the Federal funds market turned out to be smaller than in recent months. Banks were holding on to larger amounts of excess reserves in the middle weeks of February, and the volume of Federal funds transactions reported through the New York market declined from the over $5 billion daily average of the past few months to $4.4 billion during the three weeks ending February 22. The willingness of large banks to pay up for Federal funds appears consistent with the reduced interest that these banks showed in selling negotiable CD's last month, especially those maturing in 2 months or more. With bank issuing rates reduced, the net increase in outstanding CD's declined to around $600 million (measured from the week ending February 1 to an estimate for the week ending March 1). Gross CD sales declined to $4.8 billion in February from $7.4 billion in January. It would appear that banks early in February may have come to prefer to borrow at short-term, including day to day in the Federal funds market, in the expectation at that time that market interest rates were going to decline further or simply because credit demands were not burgeoning. In any event, this behavior tended to put upward pressure on the Federal funds rate, which in turn, as it persisted, contributed to the fading of declining rate expectations. CONFIDENTIAL (FR) -4- The growth rate of time deposits was March 3, 1967. 20 per cent on average in February, but the rate of growth dropped considerably as the month progressed and banks became less active in the CD market. Private demand deposits and the money supply also rose in February on average--at annual rates of 6.2 per cent and 6.4 per cent respectively--and the increases were sharper from month-end to month-end. Private deposit expansion reflected the active buying by banks of U.S. Government and State and local government securities during the month. U.S. Government deposits showed little net change on average during the month. Looking at bank deposits and bank credit from the perspective of the past three months (December-February), the daily average series for total member bank deposits has risen at an annual rate of 11.8 per cent (and 10.5 per cent after inclusion of borrowing from abroad). At the same time, the end of month series for outstanding credit of all commercial banks has risen by a 10.8 per cent annual rate (on the basis of preliminary estimates). Most of this expansion has been based on time deposits, of course. In terms of relative shares, time and savings deposits account for 75 per cent of total member bank deposit growth during the 3-month period. Using a rough and ready seasonal adjustment, negotiable CD's accounted for 35 per cent of such total deposit growth. Private demand deposits account for about 10 per cent of the growth, and U.S. Government deposits 15 per cent. CONFIDENTIAL (FR) -5- March 3, 1967. Prospective developments The easier conditions in the money market that have recently prevailed (excluding the unusually easy conditions related specifically to the end of a double reserve settlement period) can be characterized as including a Federal funds rate in the 4-1/2 - 5 per cent range, but averaging a little below 4-3/4 per cent, and a 3-month Treasury bill rate in a 4.30 - 4.50 per cent range. The difficulties in specifying consistent money market relationships are compounded by the uncertain effects of the reserve requirement reduction. The reserves released will be widely distributed throughout the country, and, in particular, will affect a great many smaller banks who may be sluggish in utilizing the funds. Thus, over the next few weeks it is probable that a fairly substantial level of net free reserves (possibly rising into the $100-$200 million range) will at times be needed in order to maintain the more comfortable over-all money market conditions that have developed. Factors that would tend to tighten the money market in the weeks ahead include: (a) the auction of $2.7 billion of June tax bills on March 7 (with only 50 per cent tax and loan credit); (b) the CD maturities and loan demand associated with March dividend and tax dates; (c) the reduction in the usual seasonal System bill purchases in the open market in view of the reserve requirement reduction and of the expected temporary decline in the Treasury's balance at the Federal Reserve (and perhaps direct borrowing by the CONFIDENTIAL (FR) -6- March 3, 1967. Treasury) prior to mid-March; and (d) the possibility that part of the expected $600-$900 million of publicly offered FNMA PC's may be in the relatively short-term area. However, over the coming period as a whole, bill demand from the public is likely to be fairly strong, including re-investment of proceeds from large capital market issues, and will provide an offset to such upward market pressures. Money market pressures are most likely to develop in connection with the March tax date. The corporate income tax payments themselves in March, at an estimated $6.8 billion, are slightly lower than last year, but they are funded to a relatively lesser extent by maturing tax bills; however, the regular weekly bill matures the day after the tax date and the proceeds may be used by some corporations to finance tax payments. CD's maturing on the tax date, at $760 million this year, are little changed from last year. It might also be noted that corporations will not have to remit withheld individual income taxes on the corporate tax date this year, but will make these payments in two instalments on March 5 and March 20. Thus, one might not expect the tax date, taken alone, to be associated with exceptional money market pressure, but normal seasonal stresses may be augmented by other factors noted in the previous paragraph, and in particular by the market's need to absorb the new tax bills. March 3, 1967. CONFIDENTIAL (FR) With respect to long-term market rates, it appears likely that they will not back up significantly over the period ahead in view of the recent abatement of bearish expectations about the course of bond prices. But the very large March corporate and State and local government calendar, plus the longer-term portion of the PC's, will probably tend to forestall any very significant rate declines--unless investors and borrowers come strongly to expect further market easing because of additional monetary policy actions and/or mounting signs of economic weakness. On the bank credit and deposit side, the easier money market conditions that have developed appear consistent with a 6-8 per cent increase in the bank credit proxy during March on average. This reflects mainly a continuation of the slower pattern of time deposit growth, especially of CD's. For the month on average time deposits are expected to rise by 8-10 per cent. While banks have the potential for increasing their outstanding CD's sharply, they no longer appear so interested, given the rebuilding they have already accomplished and the uncertain outlook for loan demands, especially beyond the coming March and April tax dates. The current bank credit projection, which we believe consistent with developments in the real economy projected in the green book, assumes that business loan growth at banks will be moderate in March and that banks will not repeat the unusually rapid February restocking of security portfolios. However, the June tax bill CONFIDENTIAL (FR) -8- March 3, 1967. which will be paid for on March 13, will have an expansive effect on bank credit in the latter part of the month. Partly for that reason the bank credit proxy is projected to expand at a 10-12 per cent annual rate from the beginning to the end of the month, as compared with about a 7.5 per cent annual rate from the beginning to the end of February. The money supply is expected to rise sharply in March at a 9-11 per cent annual rate on average, mainly reflecting the sharp increases of late February which carry over to affect the March average. Payments for the tax bill (with 50 per cent coming directly from the public) are likely to hold down growth later in March. And from the end of February to the end of March, little net change in money supply is projected. U.S. Government deposits are expected to decline slightly on average in March, but will build up after mid-month. To encourage a continued downward trend in interest rates, a further easing of money market conditions would appear to be required. This could involve a Federal funds rate fluctuating around the discount rate and a level of net free reserves perhaps as high as $200-$300 million, depending on bank reactions to the reserve requirement reduction. This would undoubtedly keep the bill rate below the present discount rate, perhaps in a 4.15-4.40 per cent range. Under such conditions, expectations could develop that would CONFIDENTIAL (FR) -9- March 3, 1967. contribute to downward yield movement throughout the market structure. But it would still be unlikely that corporate rates would move the entire way back to or through their late January early February lows. In a period such as that ahead, it is very difficult to gauge the likely bank credit expansion consistent with easing market rates. Reportedly, there is still substantial business financing demand for such activities as restructuring financial positions, financing take-overs, providing for spring tax payments and other needs not directly linked to current GNP spending. Some of the recent bulge in capital market financing has been for such purposes-perhaps a substantial part--and some of these demands might move back to banks if bank reserve pressures were eased further and bank rates reduced. To accommodate these demands and also the financing of expenditures directly generating industrial activity and employment might result in substantial reserve provision and bank credit expansion, associated with further interest rate declines. Under these circumstances, bank credit expansion might be at an annual rate of 10 per cent or more. On the other hand, if loan demands were weak--either because widespread business inventory adjustments are in process or because earlier backlogs of pending loans are worked off--bank credit expansion might tend to fall short of these expectations unless banks continued to expand security holdings sharply further. Table A-1 MARGINAL RESERVE MEASURES (Dollar amounts in millions, based on period averages of daily figures) Excess reserves Period As Member banks borrowings revised to Free reserves date As expected at conclusion of each week's open market opeations V Monthly (reserves weeks ending in): As first published each week 1966--January February March April May June July August September October November December 380 357 335 361 315 370 380 366 375 341 370 333 431 474 545 638 653 722 739 740 765 766 605 529 - 51 -117 -210 -277 -339 -352 -359 -374 -390 -425 -235 -196 1967--January p February p Weekly: 412 403 476 366 - 64 + 37 1966-- Nov. 2 9 16 23 30 279 378 547 184 460 594 646 711 439 636 -315 -268 -164 -255 -176 -301 -249 -227 -261 -207 -302 -224 -244 -236 -221 Dec. 7 14 21 28 181 510 204 437 449 647 472 548 -268 -137 -268 -111 -245 -152 -264 -112 -194 -143 -248 - 39 4 11 18 25 395 627 1"25 500 565 585 217 538 -170 + 42 - 92 - 38 -188 + 67 - 39 - 47 -175 + 61 - 53 - 62 Feb. 1 8 15 22 330 316 416 553 176 353 456 477 +154 - 37 - 40 + 76 +154* - 45 - 7 +101 - 50 - 91 + 2 +117 Mar. 1 171 167 + + - 17 1967-- Jan. ____ ____ ___ p - Preliminary ____ _ II __ ___ ____________________ 4 ____L I. 4 1 * - Reflects end of week statistical adjustments increasing F.R. float due to snow storms in the midwest. TABLE A-2 AGGREGATE RESERVES AND RELATED MEASURES Retrospective Changes, Seasonally Adjusted (In per cent, annual rates based on monthly averages of daily figures) Reserve Total Reserves A r e a t e s Monetary Required reserves Nonborrowed Against Nonborrowed Re s Total Demand Deposits T T r lM otal Member Bank Deposits (c it redit)banks) Variables Time Deposits (comm. Money Supply Private Total Demand Deposits Annually: 1965 1966 + 5.3 + 1.2 + 4.3 + 0.8 + 5.3 + 1.5 + 2.3 - 0.2 + 9.1 + 3.7 +16.0 + 8.4 + 4.7 + 1.9 + 4.4 + 0.9 Monthly: 1965--September October November - 1.2 + 3.7 + 0.6 - 3.9 + 7.3 + 5.0 - 2.2 + 9.7 - 2.0 - 6.8 + 5.1 - 3.9 + 3.6 +12.5 + 5.1 +13.7 +17.8 +15.0 + 8.1 + 8.0 + 2.9 + 9.L + 7.5 + 1.9 +13.8 + 9.8 +13.7 + 8.2 + 9.7 +11.5 +11.6 +13.0 December 1966--January February March April May June 2/ July 2/ August 2/ September 2, October 2/ November 2/ December 2/ 1.967--January 2/ February 2/ 1/ 2/ + 6.7 + 9.5 + 6.9 +11.3 + 8.1 + 7.4 + 5.7 + 4.6 + 4.0 + 2.9 +13.2 + 0.3 + 0.2 +11.4 -20.2 + 6.6 -10.0 - 1.8 + 1.1 + 3.1 - 4.6 +10.9 + 0.1 - 0.8 + 7.1 -15.8 - 0.3 - 7.1 + 5.7 + 1.1 + 2.9 + 2.7 +11.9 + 2.1 + 1.6 + 8.4 -14.8 - 0.2 - 1.1 - 7.6 + 4.9 + 3.8 + 4.0 +11.7 - 4.8 + 1.3 + 2.9 -16.9 - 3.2 - 2.0 - 8.6 - 1.3 + 3.5 + 5.5 +15.5 + 4.9 + 4.4 +10.3 - 3.4 - 0.5 - 2.9 - 5.4 + 3.9 + 5.7 + 8.1 +15.3 +12.7 +11.8 +14.8 +10.7 + 3.0 - 2.3 + 0.8 + 9.1 + 1.4 + 7.8 +11.3 - 4.9 + 6.3 -10.5 -+ 6.4 - 6.3 - 2.8 + 7.8 -+ 8.2 +12.7 - 7.2 + 7.2 -16.2 - 0.9 + 7.3 - 8.1 - 4.6 + 8.? +16.9 +13.9 +25.9 +18.6 +13.5 +14.1 +13.0 + 8.5 +16.1 +15.0 +18.1 +20.0 - 4.2 + 6.4 - 8.2 + 6.2 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 Changes in reserves have been adjusted for increases in reserve requirements in July and effective June 9, 1966. September, 1966. p - Preliminary. Chart 1 MEMBER BANK RESERVES MONTHLY AVERAGES OF DAILY FIGURES ILLIONS OF DOLLARS, SEASONALLY ADJUSTED BILLIONS OF DOLLARS, SEASONALLY ADJUSTED 21.0 BILLION i OF DOLLARS 1.5 I. + .0. MEMBER BANK BORROWINGS .5 EXCESS RESERVES 0 1965 1965 M 1966 1967 Chart 2 MEMBER BANK DEPOSITS AND LIABILITIES TO OVERSEAS BRANCHES BILLIONS OF DOLLARS 260 TOTAL MEMBER BANK DEPOSITS (CREDIT PROXY) SEAS. ADJ., WEEKLY AVERAGE OF DAILY FIGURES 256 252 248 244 240 236 LIABILITIES TO OVERSEAS BRANCHES (WEEKLY REPORTING BANKS] NOT SEAS II ADJ., WEDNESDAYS__ I I 1966 , , I I 1967 i Chart 3 MONEY SUPPLY AND BANK DEPOSITS SEASONALLY ADJUSTED WEEKLY AVERAGES OF DAILY FIGURES BILLIONS OF DOLLARS BILLIONS OF DOLLARS 180 MONEY 175 SUPPLY 170 165 TIME (All 160 DEPOSITS ADJUSTED Commercial Banks)- 155 150 145 140 135 130 125 NEGOTIABLE CD'S (Unadius td) | | || | I| S 1965 D M 20 | || J 1966 I I S D M 1 i0I J 1967 *CHANGE IN SERIES Chart 4 DEMAND DEPOSITS AND CURRENCY SEASONALLY ADJUSTED WEEKLY AVERAGES OF DAILY FIGURES I BILLIONS OF DOLLARS 45 MONEY SUPPLY COMPONENTS: 40 CURRENCY OUTSIC 35 30 140 DEMAND DEPOSIT: 135 130 125 120 F5- --- ------ --------- J.S. GOVT. DEMAND DEPOSITS (Member Banks) 10 is -------------------- M 1965 1966 1967 Table B-1 MAJOR SOURCES AND USES OF RESERVES Retrospective and Prospective (Dollar amounts in millions, based on weekly averages of daily figures) Period Factors affecting supply of reserves Federal Reserve Gold Currency Technical credit (excl. o outside factors net 2/ banks tock float) 1/ ACTUAL Year: 1965 (12/30/64 - 12/29/65) 1966 (12/29/65 - 12/28/66) +4,035 +3,149 -1,602 - 627 -2,143 -2,243 +798 +805 Year-to-date: (12/29/65 - 3/2/66) (12/28/66 - 3/1/67) - 375 172 - + 854 +1,277 + + - Weekly: 1967--Feb. 1 - 606 8'p 15 p + + 663 215 22 p + 129 154 51 1 --- = Change in total reserves = Bank use of reserves Required Excess reserves ee 3/ +1,089 +1,085 +1,188 +1,111 - 99 - 26 -1,228 -1,820 - 904 767 - 729 501 -175 -266 191 + 330 - 84 + 91 -175 487 39 - 202 332 - 28 156 - 19 256 - 9 +100 - 15 + 128 - 171 + 73 - 64 +137 - 36 + 186 - 96 - 396 - 14 -382 - Mar. 1 p Mar. 8 - 310 -- - 125 - 65 - 500 - 5005 15 - 270 -- - 170 + 435 - 5 - 5 22 29 + + 180 85 --- + + 15 30 - 150 280 + - 45 165 + - 45 165 5 12 19 + + - 245 50 155 ---- - 50 200 40 + + 140 140 390 + + 55 10 195 + + 55 10 195 26 - 125 -- + 190 - 50 + 15 + 15 -449 PROJECTED 4/ Apr. -- For retrospective details, see Table B-4. p - Preliminary. For factors included, see Table B-3. For required reserves by type of deposits, see Table B-2. See reverse side for explanation of nrolectilns. Includes effect of reduction of reserve requirements $425 million on savings deposits and time deposits under $5 million -- effective March 3, and March 16, 1967. 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) Total Period required reserves reses ACTUAL Year: 1965 X12/30/64 - 12/29/65) 1966 (12/29/65 - 12/28/66) Mar. private deposits Other than seasonal chanes Seasonal changes seasonal changes Demand Time Demand Time _Supporting Total Total _ +1,188 +1,111 - 89 - 87 +1,277 +1,194 +115 - 14 - 4 4 +499 - 5 + 677 +1,221 1/ -794 -494 - 64 - 63 -730 -431 -880 -926 + 92 + 95 + 38 +136 + 20 +264 p p p p + 91 - 19 -256 - 64 1 +102 - 83 + 36 + 92 -121 -173 -100 - 81 -232 -130 -369 + 3 + 10 + 4 -- +120 + 71 - 67 +250 + + + + 50 30 20 19 I p - 14 - 15 + 1 + 37 + 10 - 53 + 7 8 15 22 29 -405 - 80 + 45 -175 -200 - 80 +315 +255 -205 + 35 + 60 +220 -420 + 10 + 5 + 10 + 10 + 10 5 12 19 26 + 55 - 10 +195 + 15 -155 -255 -145 +115 +210 +195 +215 +345 -150 + 5 - 10 15 - 5 Year-to-date: (12/29/65 - 3/2/66) (12/28/66 - 3/1/67) Weekly: 1967--Feb. Supporting U. S. Gov't. demand demand deposits 1 8 15 22 PROJECTED Mar. Apr. -270 -430 +245 +340 -100 -415 2/ -415 2/ + 30 +.45 + 10 + 10 + + £0 1/ Reflects reserve requirements changes in July and September 1966. 2/ Includes effect of reduction of reserve requirements $425 million on savings deposits and time deposits under $5 million -- effective March 2, and March 16, 1967. p - Preliminary. Table B-3 TECHNICAL FACTORS AFFECTING RESERVES Retrospective and Prospective Changes (Dollar amounts in millions, based on weekly averages of daily figures) Technical factors (net) Period ACTUAL Year: 1965 (12/30/64 - 12/29/65) 1966 (12/29/65 - 12/28/66) Year-to-date: (12/29/65 - 3/2/66) (12/28/66 - 3/1/67) Treasury operations Float Foreign deposits and gold loans Other nonmember deposits and F. R. accounts (Sign indicates effect on reserves) +798 +805 +294 +673 -171 + 64 + 77 - 30 +598 + 98 -1,228 -1,820 +157 -153 -972 -1,101 - 2 + 16 -411 -582 Weekly: 1967--Feb. 1 8 15 22 +330 -202 -332 -171 +111 +154 -254 + 44 +241 -250 - 97 - 65 + 36 + 6 + 3 + 13 - 58 -100 + 16 -163 Mar. 1 - 96 +119 -179 + 1 - 37 8 15 22 29 - 65 +435 -150 -280 +140 +435 -500 -- -120 - 50 +270 -280 + 5 - 90 + 50 + 80 -- 5 12 19 26 -140 +140 +390 - 50 ----- -140 +120 +260 - 50 PROJECTED 1967--Mar. Apr. --- --- -+ 20 +130 -- 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 foat) , _ Reserve credit Perid fcd t (Excl. float) Period U.S. Government securities a Total i Repurchase Other 1Bills o l agreements holdings h Federal Securiie Agency Securities Year: 1965 (12/30/64 - 12/29/65) 1966-(12/29/65 - 12/28/66) +4,035 +3,149 +3,916 +3,069 +3,145 +2,158 +916 +474 -145 +437 Year-to-date: (12/29/65 - 3/2/66) (12/28/66 - 3/1/67) - 375 172 + 347 243 + 257 679 +131 -221 -436 7 14 21 28 + + 97 19 231 556 + + 256 202* 112* 452 + + 141 120 69 105 +115 -154 + 26 +315 + + + 4 11 18 25 + 319 + 347 -1,073 + 283 + + + 282 345 611 3 + + + 434 303 203 109 -152 + 42 -408 -106 + 1 8 15 22 + + + 606 663 215 129 + + + 242 434 105 69 + + - 208 230 59 143 - 34 +204 + 46 +212 1 - 449 - 142 + 98 Weekly: 1966--Dec. 1967-- Jan. Feb. Mar. ______________________________________________________ & _________________ _________________ - -- -240 - 3 Bankers' aceptBankers Member banks acceptances borrowings + 77 + 42 + 52 + + 10 - 31 - 38 -381 Member banks 2 -187 +198 -175 + 76 + + 17 + 20 -368 +321 + 1 -362 +177 + 6 + 24 +103 + 21 - -310 8 I * - Includes effect of change in special certificates of +$72 million in the week of December 14, 1966, and -$72 million in the week of December 21, 1966. Chart Reference Table C-1 TOTAL, NONBORROWED AND REQUIRED RESERVES Seasonally Adjusted (Dollar amounts in millions, based on monthly averages of daily figures) Toal Period reserereere reserves reserves NonbRequired reserves Total Total Aainst pr vate deposits Total Demand Total Demand 1965--January February March April May June July August September October November December 21,960 22,157 22,279 22,449 22,436 22,612 22,682 22,689 22,667 22,737 22,748 23,010 21,625 21,771 21,814 21,953 21,994 22,082 22,158 22,186 22,114 22,248 22,341 22,523 21,563 21,713 21,868 22,036 22,109 22,243 22,332 22,299 22,259 22,439 22,402 22,657 20,702 20,765 20,881 20,985 20,962 21,138 21,247 21,331 21,553 21,720 21,803 21,970 15,730 15,717 15,789 15,831 15,750 15,877 15,912 15.916 16,071 16,151 16,168 16,285 1966--January February March April May June 1/ July 1/ August 1/ September 1/ October 1/ November 1/ December 1/ 23,139 23,217 23,274 23,530 23,536 23,539 23,763 23,363 23,492 23,297 23,262 23,283 22,701 22,759 22,671 22,877 22,878 22,862 22,997 22,695 22,700 22,566 22,674 22,695 22,788 22,844 22,896 23,123 23,163 23,193 23,355 23,067 23,064 23,042 22,896 22,990 22,075 22,084 22,269 22,477 22,453 22,582 22,515 22,517 22,597 22,430 22,383 22,522 16,364 16,356 16,510 16,625 15,534 16,626 16,472 16,428 16,497 16,352 16,321 16,411 1967--January p 1/ February p 1/ 23,610 23,883 23,184 23,544 23,249 23,523 22,531 22,743 16,325 16,432 p - Preliminary. 1/ Reserves have been adjusted for redefinition of time deposits effective June 9, 1966. 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) / Time m deposits Private demand deposits 2/ U.S. Gov't. demand deposits 1965--January February March April May June July August September October November December 218.4 220.4 222.5 224.6 225.8 227.7 229.1 230.4 231.1 233.5 234.5 236.4 106.0 107.6 108.6 109.9 111.1 112.2 113.8 115.5 116.9 118.7 120.2 121.2 107.4 107.3 107.8 108.1 107.5 108.4 108.6 108.6 109.7 110.2 110.4 111:2 5.0 5.5 6.1 6.7 7.2 7.1 6.7 6.3 4.6 4.5 4.0 4.0 1966--January February March April May June 3/ July 3/ August 3/ Sept. 3/ Oct. 3/ Nov. 3/ Dec. 3/ 238.0 238.7 239.8 242.9 243.9 244.8 246.9 246.2 246.1 245.5 244.4 245.2 121.8 122.1 122.8 124.8 126.2 127.0 128.9 129.8 130.1 129.6 129.3 130.3 111.7 111.6 112.7 113.5 112.9 113.5 112.4 112.1 112.6 111.6 111.4 112.0 4.5 5.0 4.3 4.7 4.8 4.3 5.6 4.2 3.5 4.3 3.7 2.9 1967--Jan. 3/ p Feb. 3/ p 248.5 251.6 132.3 134.6 111.4 112.2 4.8 4.8 Includes all deposits subject to reserve requirements--i.e., the total of time, private demand, and U.S. Government demand deposits. Movements in this aggregate correspond closely with movements in total member bank credit. 2/ Private demand deposits include demand deposits of individuals, partnerships and corporations and net interbank balances. 3/ Deposits have been adjusted for redefinition of time deposits effective June 9, 1966. p - Preliminary. 1/ 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: (credit/ 1966--Aug. Time deposits ______ Private demand U. S. Gov't. demand deposits 2/ deposits 3* 10* 17* 24* 31* 246.1 246.3 246.5 245.0 246.8 129.2 129.4 129.9 130.1 130.3 112.1 111.1 112.3 112.1 112.2 4.8 5.7 4.3 2.8 4.4 Sept. 7* 14* 21* 28* 247.0 246.5 245.7 245.7 130.2 130.2 129.8 130.0 112.5 112.1 113.7 112.8 4.3 4.2 2.2 2.9 Oct. 5* 12* 19* 26* 246.2 245.2 244.3 246.1 129.8 129.8 129.8 129.3 112.8 112.1 111.5 111.0 3.5 3.3 3.0 5.9 Nov. 2* 9* 16* 23* 30* 246.1 245.8 244.4 243.0 243.2 129.5 129.3 129.3 129.3 129.2 111.2 111.1 111.1 111.1 111.3 5.4 5.3 4.0 2.2 2.7 Dec. 7* 14* 21* 28* 244.5 244.5 245.5 245.7 129.5 129.8 130.2 131.0 111.9 111.2 113.1 111.5 3.2 3.5 2.2 3.2 1967--Jan. 4* 11* 18* 25p* 247.3 247.7 247.8 249.3 131.4 131.7 132.1 132.9 112.6 111.6 111.4 110.6 3.3 4.4 4.3 5.8 Feb. lp* 8p* 250.3 251.5 133.7 134.1 111.3 111.8 5.4 5.6 15p* 22p* 251.4 251.7 134.4 134.8 111.5 113.1 5.5 3.8 lp* 251.7 134.8 112.7 4.2 Mar. p - Preliminary. Includes all deposits subject to reserve requirements--i.e., the total of time, private demand, and U.S. Government demand deposits. Movements in this aggregate correspond closely with movements in total member bank credit. 2/ Private demand deposits include demand deposits on individuals, partnerships and corporations and net interbank balances. * - Deposits have been adjusted for redefinition of time deposits effective June 9, 1966. 1/ TABLE C-3 MONEY SUPPLY AND TIME DEPOSITS AT ALL COMMERCIAL BANKS Seasonally adjusted (Dollar amounts in billions, based on monthly averages of daily figures) Monthly Money Supply Currency 1/ Private Demand Deposits T Time Deposits 2/ Adjusted 1965--January February March April May June July August September October November December 159.7 159.8 160.3 161.0 160.7 161.7 162.4 163.0 164.1 165.2 165.6 167.2 34.5 34.6 34.7 34.8 34.9 35.0 35.3 35.5 35.7 36.0 36.1 36.3 125.3 125.2 125.6 126.2 125.8 126.7 127.2 127.5 128.5 129.3 129.5 130.9 128.7 130.7 132.0 133.3 134.6 136.2 137.9 140.0 141.6 143.7 145.5 146.9 1966--January February March April May June 3/ July 3/ August 3/ Septemberp October 3/ November 3, December] 168.0 168.2 169.3 170.9 170.2 171.1 169.6 169.6 170.5 169.6 169.2 170.3 36.6 36.8 36.9 37.2 37.3 37.4 37.7 37.8 37.9 38.0 38.0 38.3 131.4 131.4 132.3 133.7 132.9 133.7 131.9 131.8 132.6 131.7 131.2 132.1 147.8 148.5 149.5 151.4 153.0 154.5 156.5 157.8 158.2 157.9 158.0 159.2 1967--January .3/ February3/i 169.7 170.6 38.5 38.7 131.2 131.9 161.6 164.3 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. 1/ 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 Currency _/ Money Supply _ 1966--Aug. Demand Deposits __ 2/ Time Deposits adusted adjusted 169.2 168.7 169.7 169.8 170.0 37.7 37.8 37.8 37.8 37.7 131.6 130.9 131.9 132.0 132.2 157.0* 157.4* 157.9* 158.0* 158.2* Sept. 7 14 21 28 170.5 170.1 171.7 170.0 37.8 38.0 38.0 37.9 132.6 132.1 133.7 132.1 158.2* 158.2* 158.1* 158.4* Oct. 5 12 19 26 170.7 170.2 169.6 168.9 37.9 38.0 37.9 37.9 132.8 132.2 131.7 131.0 158.2* 158.0* 158.1* 157.7* Nov. 2 9 16 23 30 168.9 168.8 168.9 169.3 169.3 37.8 38.0 38.1 38.0 38.1 131.1 130.9 130.8 131.3 131.2 157.8* 157.9* 158.0* 158.0* 157.9* Dec. 7 14 21 28 169.7 169.1 171.9 170.3 38.1 38.2 38.2 38.4 131.7 130.9 133.7 131.9 158.2* 158.6* 159.2* 160.0* 170.8 170.2 170.3 169.1 38.4 38.6 38.5 38.4 132.4 131.6 131.8 130.7 160.5* 160.9* 161.3* 162.1* 169.0 169.5 170.1 172.0 38.5 38.6 38.8 38.8 130.5 130.9 131.3 133.2 163.1* 163.6* 164.2* 164.7* 171.7 38.8 132.9 164.9* 1967--Jan. Feb. Ip 8p 15p 22p Mar. 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 of Federal Reserve Banks. * - Deposits have been adjusted for redefinition of time deposits effective June 9, 1966. 1/ p - Preliminary
@FedFRASER