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Strictly Confidential (FR) Class I FOMC May 12, 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 May 12, 1978 STRICTLY CONFIDENTIAL (FR) CLASS I - FOMC MONETARY AGGREGATES AND MONEY MARKET CONDITIONS Recent developments (1) Growth in M-1 accelerated to an annual rate of 19 per cent in April, partly reflecting the sharp rebound in economic activity that is in process. In addition, the month appears to have been affected by transitory tax-related factors, including a build-up in individual cash balances to make larger than usual nonwithheld tax payments and some delay by the Treasury in processing such payments. M-1 is expected to increase at about a 6-1/2 per cent annual rate in May, given data thus far available in the month, bringing growth over the April-May period to around a 13 per cent annual rate, well above the upper end of the Committee's range. The rapid expansion of M-1 also has boosted growth in M-2 over April and May to about an8-3/4 per cent annual rate, near the upper end of its two-month range. The pick-up in deposit growth in April enabled banks to accelerate their acquisitions of earning assets to a 21 per cent annual rate. Deposit growth at nonbank thrift institutions remained weak in April. Growth in Monetary Aggregates over April-May Period (SAAR in per cent) Ranges Latest Estimates M-1 4 to 8½ 12.9 M-2 5½ to 9½ 8.8 Memo: Federal funds rate (per cent per annum) 6¾ to 7½ Avg. for statement week ending Apr. 19 6.78 26 7.00 May 3 7.27 7.32 10 -2(2) As incoming data on the aggregates continued to strengthen following the April FOMC meeting, the Desk raised its Federal funds rate target to around 7-1/4 per cent from the 6-3/4 per cent level which had prevailed since early January. At a tele- phone conference meeting on May 5, it was reported that growth in M-1 appeared to be well in excess of the Committee's range and growth in M-2 at the top of its range. To provide time for more evidence on the economy and on the extent to which the strength in the aggregates would subside, the FOMC decided that the Desk should continue aiming for a 7-1/4 per cent Federal funds rate. However, the Manager was instructed to be more tolerant of deviations of the funds rate above the desired level than below it, and in the most recent statement week the Federal funds rate averaged 7.32 per cent. (3) The increase in the Federal funds rate from the earlier 6-3/4 per cent level induced a sharp rise in member bank borrowing from Federal Reserve Banks. In the statement week just ended, such borrow- ing totalled $1.7 billion, up from a level of $239 million in the week of April 19. The discount rate was raised 1/2 point to 7 per cent on May 11, in order to bring it into better alignment with market rates, and most recently member bank borrowing has declined substantially. Still, increased member bank borrowing on average is estimated to supply the bulk of the 11-1/4 per cent expansion in total reserves over the April-May period. (4) Along with the rise in the Federal funds rate, most short- and longer-term market interest rates have risen by 20 to 45 -3basis points since the April Committee meeting, and the bank prime rate was increased from 8 to 8-1/4 per cent. Demands of nonfinancial businesses for short-term credit remained quite strong, as evidenced by substantial increases in both commercial paper and bank business loans in April. The Treasury, on the other hand, has paid down $12 billion of cash mangement bills since the April tax date, contributing to a relative scarcity of short-term bills. The reduction in the available supply of these instruments has helped to limit the response of many short-term interest rates to the firming of money market conditions. In its mid-May refund- ing, the Treasury redeemed $1.9 billion of the $5.9 billion of publicly held maturing issues and offered a total of $4 billion in a 10 year note and a 22-1/4 year bond. Dealers distributed the bulk of their awards of the bond and about half of their holdings of the new notes within a day or two of the auction. Despite the rise in interest rates, stock prices have moved higher on balance over the inter-meeting period. (4) Conditions in mortgage markets have continued to tighten. Rates on primary conventional mortgages have risen 15 basis points since mid-April, bringing the increase in this rate over the first four months of 1978 to about 1/2 percentage point. In addition, savings and loan associations reduced their outstanding level of loan commitments again in March, and concern about further upward movements in mortgage rates has contributed to a marked rise in offerings at FNMA auctions of forward purchase commitments. (6) The table on the next page shows percentage annual rates of change in related monetary and financial flows over various time periods. 1976 & 1977 Average Past Twelve Months Apr. '78 over Apr. '77 Past Six Months Apr. '78 over Oct. '77 Past Three Months Apr. '78 over Jan. '78 Past Month Apr. '78 over Mar. '77 Nonborrowed reserves 1.5 5.0 11.1 3.4 2.8 Total reserves 2.1 6.4 6.5 4.1 10.2 Monetary Base 7.6 8.7 8.5 6.0 8.1 6.9 7.3 6.5 7.2 19.1 M-2 (M-1 plus time deposits at commercial banks other than large CD's) 10.3 8.2 6.9 7.0 11.3 M-3 (M-2 plus deposits at thrift institutions) 12.2 9.9 7.7 7.3 9.9 M-3 (M-2 plus CD's) 8.8 10.3 10.3 9.6 12.1 M-5 (M-3 plus CD's) 11.1 11.1 9.8 8.8 10.4 Month-end basis 9.5 10.9 11.0 13.9 21.5 Monthly average 9.3 11.1 10.7 11.1 12.5 -0.3 1.8 2.8 2.4 1.4 0.2 0.2 0.2 0.5 0.6 Concepts of Money M-1 (Currency plus demand deposits) 1/ 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 (7) The table below presents for Committee consideration two 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 M-1 4½ to 8½ 4 to 8 M-2 5 to 9 4½ to 8½ 7 to 7¾ 7½ to 8¼ Ranges for May-June Federal funds rate (Intermeeting period) (8) Growth in M-1 is expected to slow considerably over the two-month May-June period from the extraordinary April rate, partly because the temporary impact of tax-related factors should be unwinding. Under alternative A--which encompasses a range for the Federal funds rate centered on its recently prevailing level of around 7-3/8 per cent--M-1 is expected to expand in a 4 range over the May-June period. to 8 per cent annual rate Given this projection, the level of M-1 in each month of the second quarter would be above levels implied by the FOMC's longer-run range, as shown in Chart 1 on the following page. Growth in M-1 in the second quarter would be at a 9¼ per cent annual rate, reflecting for the most part the sharp rebound in economic activity this quarter, when nominal GNP is now anticipated to expand at a 17½ per cent annual rate. Chart 1 RECENTLY ESTABLISHED M-1 GROWTH RANGES AND ACTUAL M-1 ILLIONS OF DOLLARS 6% - Projection S '- - 360 - Q1 '78-01 '79 350 4% 340 ' Q4 '77- -Q4 '78 S350 - 4 .cC- 340 320 - 350 Q3 '77-Q3 '78 310 340 320 -1350 310 Q2 '77- Q2 '78 320 310 320 310 1977 1978 Alternative Levels and Growth Rates for Key Monetary Aggregates M-1 M-2 Alt. A Alt. B Alt. A Alt. B 1978 April May June 345.5 347.4 349.2 345.5 347.3 348.9 827.9 832.2 837.9 827.9 832.1 837.2 1978 QI QII QIII QIV 339.5 347.4 352.2 354.8 339.5 347.2 351.6 354.5 816.8 832.7 848.2 863.0 816.8 832.4 847.0 862.0 1979 QI 357.3 357.3 877.4 877.1 6.6 6.2 6.3 5.5 6.2 8.2 6.1 7.4 Growth Rates Monthly: 1978 May June Quarterly Average: 1978 QII QIII QIV 9.3 5.5 3.0 9.1 5.1 3.3 7.8 7.4 7.0 7.6 7.0 7.1 1979 QI 2.8 3.2 6.7 7.0 7.5 2.9 7.1 3.2 7.7 6.9 7.4 7.1 5.2 5.2 7.4 7.4 Semi-Annual: QI '78-QIII '78 QIII '78-QI '79 Annual: QI '78-QI '79 Alternative Levels and Growth Rates for Key Monetary Aggregates (cont'd) M-3 Bank Credit Alt. A Alt. B Alt. A Alt. B 1978 April May June 1409.2 1417.2 1426.3 1409.2 1416.7 1425.0 905,0 913.4 920.6 905.0 913.4 920.3 1978 QI QII QIII QIV 1390.8 1417.6 1444.3 1470.0 1390.8 1417.0 1441.5 1466.7 888.2 913.0 932.4 951.0 888.2 912.9 932.1 950.3 1979 QI 1495.1 1492.1 968.1 966.4 6.8 7.7 6.4 7.0 11.1 9.5 11.1 9.1 Growth Rates Monthly: 1978 May June Quarterly Average: 1978 QII QIII QIV 7.7 7.5 7.1 7.5 6.9 7.0 11.2 8.5 8.0 11.1 8.4 7.8 1979 QI 6.8 6.9 7.2 6.8 7.7 7.0 7.3 7.0 10.0 7.7 9.9 7.4 7.5 7.3 Semi-Annual: QI '78-QIII '78 QIII '78-QI '79 Annual: QI '78-QI '79 9.0 8.8 (9) Growth in M-2 over the May-June period is also likely to be in a 5 to 9 per cent annual rate range under alternative A. Unlike levels of M-l, the implied levels of M-2 would be generally within the longer-run ranges adopted by the Committee for this aggregate, as shown in Chart 2 on the following page.1/ (10) The recent and expected near-term increases in market rates of interest will probably be associated with continued slow growth in savings deposits. Banks are expected to benefit only modestly from the June 1 introduction of the new 6-month and 8-year certificates, because these instruments are likely to be particularly attractive to the most interest-sensitive depositors who will probably 2/ take advantage of the higher rates offered by thrift institutions.2/ However, with loan demands expected to remain large, and demand deposits decelerating from their rapid growth in April, banks are projected to step up significantly their issuance of large-denomination time deposits. Since a major portion of such instruments are included in M-2, the interest-bearing component of this aggregate is expected to pick up somewhat from its reduced March-April pace. (11) Even if the funds rate does not rise significantly from recent levels, other short-term rates could edge up further 1/ Charts 3 and 4 showing the relationship between the short-run behavior of M-3 and bank credit and their longer-run ranges may be found following page 16. 2/ On May 11, the Federal regulatory agencies announced authorization of a new 8-year certificate at ceiling rates of 8 and 7¾ per cent at thrifts and banks, respectively, and a 6-month, $10,000 minimum, certificate whose ceiling rate floats with the auction rate on 6-month Treasury bills; the 6-month certificate ceiling is of a percentage point more than the bill rate for thrifts and equal to the bill rate for banks. Chart 2 RECENTLY ESTABLISHED M-2 GROWTH RANGES AND ACTUAL M-2 BILLIONS OF DOLLARS 9% -*-Projection 11'79 - 890 -875 ( 6'A% - 860 -845 -830 -Q4'78 815 845 830 9% 770 Q3'77-Q3'78 755 740 815 S845 830 815 770 755 S845 740 Q2'77-Q2'78 7% 770 -830 -815 755 800 740 785 770 755 740 1977 1978 -9over the weeks ahead. Issuance of commercial paper and bank CD's is likely to be substantial in coming weeks to accommodate the expected large business demands for credit. Moreover, the Treasury is not expected to retire bills, as it did following the April tax date, and it is possible that the Treasury may issue a sizable short-dated cash management bill in early June. Finally, if the dollar continues to strengthen on exchange markets, foreign official accounts might become significant net sellers of bills. (12) Long-term rates are expected to show relatively little change under the conditions of alternative A. Public offerings of corporate bonds are projected to remain moderate over the coming weeks, and State and local bond issuance should drop off markedly in late May after the effective date of the new IRS ruling with regard to sinking fund provisions of tax-exempt bond offerings. On the other hand, the Treasury--after retiring about $2 billion of coupon securities in the latest refunding--will probably raise about $2 to $2 billion of new cash when it sells the regular four-year cycle note in early June. In addition, the FHLB System will announce terms for its mid-quarter refunding early next week, and is expected to raise about $1 billion in this operation. Receptions for these offerings could be quite good, however, since dealers have distributed the bulk of their awards of the Treasury refunding issues and have reestablished a short position in coupon issues. (13) Alternative B calls for an increase in the Federal funds rate to the mid-point of a now and mid-June. 7½ to 8¼ per cent range between M-1 growth would likely be in a 4 to 8 per cent -10annual rate range over May and June and M-2 growth in a 4-1/2 to 8-1/2 per cent range. Under this alternative, short-term rates generally might rise 1/2 percentage point or a little more. With loan demands expected to remain sizable, relatively prompt upward adjustments in the prime loan rate may be anticipated. Moreover, a rise in member bank borrowings would also increase pressure for another discount rate adjustment. Bond yields too could be expected to rise, though increases may be limited since current market yields have probably anticipated some further monetary tightness. The widening spread between interest rates in the United States and the rest of the world would tend to provide support for the exchange value of the dollar. (14) The staff believes that over the QI '78 to QI '79 period interest rates will have to rise to levels significantly higher than previously projected if M-1 growth is to be restrained to the mid-point, or perhaps even the upper half, of its 4 to 6½ per cent longer-run range. M-1 is now expected to expand at about a 9¼ per cent annual rate in the second quarter--3¼ percentage points more than projected last month. Consequently, in order to achieve 5¼ per cent M-1 growth over the four-quarter period, interest must rise sufficiently to restrain M-1 growth to an annual rate below 4 per cent over the remaining three quarters--an interval in which nominal GNP is projected to grow at an 11-3/4 per cent annual rate. The implied rates of increase in velocity--shown in Appendix II--are unusually large, more than twice the average of the past two years. -11(15) The Federal funds rate level that the staff believes will be needed to induce such velocity increases are shown in Appendix I. Under alternative A the Federal funds rate might need to rise by fall into a range of 9 to 10 per cent--about one percentage point higher than projected last month.1 / These projections assume some further downward shift in the demand for money--as a result, for example, of more intensive marketing of previously introduced innovations 2/ and cash management services as interest rates rise.- It should be noted, though, that the relationship between money demand, income, and interest rates in the Board's econometric model has not generated any evidence of a further downward shift over the past five quarters. (16) Under either alternative A or B, growth over the quarters ahead of interest-bearing deposits subject to rate ceilings will slow more than projected last month. Not only are market interest rates now expected to be higher, but the upward adjustment in deposit rate ceilings announced by the regulatory agencies is less 1/ Under alternative B, restraint would be introduced earlier and, as a result, the level of the funds rate required at the end of the longer-run policy period would be somewhat less--possibly in an 8¾ to 9¾ per cent range. 2/ However, the staff as yet has made no allowance for the impact on measured M-1 of automatic transfers from savings accounts to demand deposits, scheduled to be authorized at commercial banks on November 1. This service is expected to have a significant depressing impact on the level of M-1, as balances are shifted from demand to savings accounts, and consequently is likely to reduce, perhaps sharply, the rate of growth of M-1 over the QI '78 to QI '79 period; M-2, on the other hand, is likely to be only marginally affected. Of course, after automatic transfers are implemented, smaller rates of growth of measured M-1 will have the same economic and policy significance as larger rates of growth previously. During the transition period, however, changes in M-1 will be difficult to interpret. -12than the staff had previously projected.1 Consequently, the staff believes that a further increase in deposit rate ceilings on longerterm certificates will be needed to maintain flows of small-denomination time deposits, and has assumed such an increase in the fourth quarter. Even with an increase in ceiling rates, growth in M-3 over the longerrun policy period may be around the lower end of its 7½ to 10 per cent range. While growth in small-denomination time and savings deposits at banks will also remain weak, M-2 expansion is expected to be near the mid-point of the Committee's longer-run range, reflecting sizable issuance of time deposits not subject to interest rate ceilings. The slower growth of deposits subject to rate ceilings, and the resultant increased reliance on managed liabilities and draw-downs of portfolio liquidity by both banks and thrift institutions, will be associated with mounting strains on their balance sheet positions. As the year progresses, therefore, the ability and willingness of these institutions to meet credit demands can be expected to decline substantially. 1/ The staff had assumed a 50 basis point increase on all time deposit ceiling rates. -13Directive language (17) Given below are alternatives for the operational paragraphs of the directive.1/ The first formulation, like the directive adopted at the last meeting, places main emphasis on nearterm rates of growth in monetary aggregates; it shows--in strikethrough form--the specifications adopted at the last meeting. The second formulation places main emphasis on money market conditions. In both formulations, variants are shown for particular phrases that are intended to be associated with the specifications discussed in the preceding section under alternatives A and B. "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 [DEL: April-May]MAY-JUNE period to 4 to be within ranges of[DEL: 8½] ____ TO ____ per cent for M-1 and [DEL: 9½]____ TO ____ per cent for M-2. 5½ to In the judgment of the Committee such growth rates are likely to be associated with a weekly-average Federal funds rate (A) AT ABOUT THE CURRENT LEVEL. (B) slightly (OR SOMEWHAT) above the current level. 1/ In a memorandum dated May 11 Chairman Miller proposed modified language for these operational paragraphs and for the preceding paragraphs dealing with the Committee's general policy stance and longer-run ranges for the aggregates. -14If, giving approximately equal weight to M-1 and M-2, it appears that growth rates over 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 [DEL: ____ 6¾ 7½] to 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 (A) to maintain about the prevailing money market conditions (or (B) to achieve slightly 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 (A) to maintain the weekly-average Federal funds rate at about the current level (or (B) to increase the weekly-average Federal funds rate slightly or somewhat from the current level), so -15long as M-1 and M-2 appear to be growing over the May-June period at annual rates within ranges of ____ to ____ per cent and ____ to ____ per cent, respectively. If, giving approximately equal weight to M-1 and M-2, it appears that growth rates over the 2month period are approaching or moving beyond the limits of the indicated ranges, the operational objective for the weeklyaverage 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. Chart 3 RECENTLY ESTABLISHED M-3 GROWTH RANGES AND ACTUAL M-3 BILLIONS OF DOLLARS 01'78-Q1'79 - Projection 10% 1530 1500 - - 1470 -- 1440 1410 SQ4'77-Q4'78 1380 7 /% 1440 1410 10o 1290 % 1380 1260 1230 -1410 1380 1290 1260 0- - 1440 1% O 1230 Q2'77-Q2'78 / ) 8% 1380 1290 > 1260 - 1230 - 1350 ," ' 1320 1290 1260 1 23 0 1410 I I I I I 1977 I I I I I I I I I I I 1978 Chart 4 RECENTLY ESTABLISHED BANK CREDIT GROWTH RANGES AND ACTUAL BANK CREDIT BILLIONS OF DOLLARS 10' -- Projection % ' 78-Q1 '79- 970 7,% - 950 9 - - -Z 930 S- - 910 S. - 890 .- S-I930 .. - S-930 -Q4'77-Q4 4- '78 -910 -890 10% - I .,T o - *- 0"-- 7%7 3 930 -* I 9 o 910 - 890 S- 277-Q2 78 178 1'72 0- 1977 1978 870 Appendix I Projected Federal Funds Rate Alt. A 1978 Alt. B 7¼ to 7¾ 7½ to 8 QIII 8½ to 9¼ 8¾ to 9½ QIV 1979 QII 9 to 10 8¾ to 9¾ QI 9 to 10 8¾ to 9¾ Appendix II Implied Velocity Growth Rates V, (GNP/MI) 1978 Alt. A Alt. B 7.1 5.6 6.0 IV 8.7 8.3 I 8.1 7.6 II 8.4 8.5 III 3.7 4.0 IV V2 6.9 III 1979 II 4.6 4.6 (GNP/M2 ) 1978 1979 I Appendix Table III-1 MONEY STOCK--M-1 (Annual rates of growth, compounded quarterly)1/ Ending Ending Period 74IV Base Period 751 7511 75111 75IV 761 7611 76111 761V 771 7711 77111 77IV 781 6.4 5.0 6.3 6.3 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 7.4 I 5.3 5.7 5.6 5.5 6.0 6.3 6.1 7.3 7.1 II 5.6 6.0 5.9 5.9 6.4 6.7 6.6 7.6 7.7 8.3 III 5.8 6.2 6.2 6.2 6.7 7.0 7.0 7.8 7.9 8.3 8.3 IV 6.0 6.3 6.3 6.3 6.7 7.0 7.0 7.7 7.8 8.0 7.8 7.4 I 5.9 6.2 6.2 6.2 6.6 6.8 6.8 7.3 7.2 7.3 6.9 6.2 5.1 A 5.7 6.0 5.9 5.9 6.2 6.3 6.2 6.5 6.3 6.3 6.0 5.6 5.2 5.2 Alt. B 1978 4.3 IV 1977 2.3 III 1976 I II 1975 5.7 6.0 5.9 5.9 6.2 6.3 6.2 6.5 6.3 6.3 6.0 5.6 5.2 5.2 1979 I Alt. IF Based on quarterly average data. Appendix Table III-2 MONEY STOCK--M-2 (Annual rates of growth, compounded quarterly)1/ Base Period Ending Period 74IV 751 7511 7511 75IV 761 7611 76111 76IV 771 7711 77111 771V 10.2 8.8 10.1 8.3 9.0 I 8.9 9.5 9.3 8.9 11.0 II 9.1 9.7 9.5 9.4 10.7 III 9.1 9.5 9.4 9.3 10.1 IV 9.6 10.1 10.0 10.1 10.9 10.8 11.1 13.2 I 9.8 10.2 10.2 10.3 11.0 10.9 11.1 12.3 11.3 II 9.7 10.1 10.1 10.1 10.7 10.6 10.7 11.3 10.3 9.4 III 9.8 10.1 10.1 10.2 10.6 10.6 10.6 11.0 10.3 9.8 10.3 IV 1978 8.3 IV 1977 6.4 III 1976 I II 1975 9.7 10.0 9.9 9.9 10.3 10.2 10.2 10.5 9.8 9.3 9.2 8.2 I 9.4 9.6 9.6 9.9 9.8 9.7 9.8 9.1 8.6 8.3 7.4 6.6 ** * 1979 781 6.9 9.7 * * * * ** * 10.4 9.6 8.9 ** I Alt. 9.1 9.0 9.0 9.1 9.0 8.8 8.8 8.4 8.0 7.8 7.4 7.2 7.4 Alt. 1/ 8.9 8.9 9.1 9.0 9.0 9.1 9.0 8.8 8.8 8.3 8.0 7.8 7.4 7.2 7.4 Based on quarterly average data. Appendix Table III-3 MONEY STOCK--M-3 (Annual rates of growth, compounded quarterly)1/ Base Period Ending Period 1975 74IV I 75111 7511 751 75IV 761 _ 7611 - 76111 -~-- 76IV - 771 - - 7711 77111 771V 8.3 II 11.5 13.1 13.2 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 1978 13.0 IV 1977 10.6 III 1976 11.8 12.2 12.1 12.0 12.2 12.2 12.2 12.3 11.7 11.4 11.7 11.0 I 11.5 11.8 11.7 11.5 11.7 11.6 11.5 11.5 10.9 10.4 10.3 9.3 7.6 * 1979 781 **** * * * * * * * * I Alt. 10.7 10.6 10.4 10.4 10.2 10.0 9.4 8.9 8.7 8.1 7.5 7.5 Alt. I/ 10.6 10.5 10.6 10.5 10.3 10.3 10.1 10.0 9.3 8.8 8.6 8.0 7.4 7.3 Based on quarterly average data. 5/12/78 CHART I MONEY MARKET CONDITIONS AND INTEREST RATES 1976 1977 1978 1976 1977 1978 1976 1977 1978 CHART R 5/12/78 MONETARY AGGREGATES BANK CREDIT SEND OF BILLIONS OF DOLLARS 940 MONTH - - I I I RESERVES F I I I BILLIONS OF WEEKLY AVERAGES TOTAL 1976 I 1978 820 - I 860 - SI 900 780 740 CONFIDENTIAL (FR) CLASS II-FOMC MAY 12, 1978 Table 1 MONETARY AGGREGATES ACTUAL AND CURRENT PROJECTIONS, SEASONALLY ADJUSTED Money Supply Narrow Broad (M2) Total U.S. Govt. Deposits 1/ 1 Period 2 3 ___(Ml) MONTHLY _Time Total otal 4 & Savings Deposits Other Than CD's Other Savins 5 CD's "8 7 6 Nondeposit Sources of Fund 2/ LEVELS-SBIL 1978-FEB. MAR. APR. MAY 339.1 340.1 345.5 (347.4) 616.6 820.2 827.9 (832.2) I 7.5 7.9 8.3 8.1) 556.8 562.1 565.9 (571.6) 477.5 480.1 482.4 (484.8) 220.7 220.8 221.4 1221.2) 256.7 259.3 261.0 (263.6) ( 79.4 82.0 83.4 86,8) 06.9 67.2 65.5 S ANNUAL GROWTH QUARTbRLY 1977--3RD QTR. 4TH GTR. 9.0 6.2 10.1 7.0 9.9 14.5 10.8 7.6 10.9 1.3 10.8 13.3 3.2 64.0 1978--1ST 4.0 6.2 12.6 7.8 2.4 12.6 43.2 1977--3RD QTR. 4TH OTR. 8.1 7.2 9.9 8.0 10.3 13.0 11.2 8.5 7.3 5.4 14.4 11.4 4.5 44.9 1978-1ST OTR. 5.0 6.4 13.1 7.5 2.2 12.0 50.0 ( -1.1 3.5 19.1 6.6) 4.4 5.3 11.3 6.2) ( 13.7 11.4 8.1 12.1) 8.4 6.5 5.7 6.01 1 48.8 39.3 20.5 48.9) ( 12.9) 8.8) ( 10.11) 5.9) ( 35.1) QTR. QUARTERLY-AV MONTHLY 1978-FEB. MAR. APR. MAY APR.-MAY WEEKLY ( ( ( 14.7 12.2 7.9 12.0) ( 1.1) ( 9.9) LEVELS-SBIL 1978-APR. MAY NOTE: 1/ 2/ ( 0.5 0.5 3.3 -1.1) 5 12 19 26 341.8 344.0 344.8 346.5 823.7 825.9 827.8 829.5 8.4 9.0 8.5 8.1 564.0 564.4 566.1 567.5 481.9 481.9 482.9 483.0 221.2 222.0 221.4 221.1 260.7 259.9 261.5 261.9 82.1 82.5 83.2 84.4 3 350.5 833.7 7.5 568.9 483.1 221.3 261.8 67.5 66.3 61.4 67.0 85.8 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 IN THE FORM OF FEDERAL FUNDS PURCHASED, AND OTHER LIABILITIES FOR BORROWED MONEY, PLUS GROSS LIABILITIES TO OWN MENTS TO REPURCHASE, LOANS SOLD TO AFFILIATES, LOAN RPS, AND OTHER MINOR ITEMS. (EURODOLLAR BORROWINGS), SECURITIES SOLD UNDER FOREIGN BRANCHES AGREE- Table 1-A TIME AND SAVINGS DEPOSITS AT ALL COMMERCIAL BANKS SEASONALLY ADJUSTED EXCEPT AS NOTED Period Total Time Tand Savings Deposits Total Savings OUTSTANDING 1978 Time Deposits Business (NSA) Government Total (NSA) Large t Small Negotiable CD's Denomina ion Denomination 5 521.9 525.9 531.9 540.0 544.9 550.5 556.8 562.1 565.9 217.0 218.8 219.5 219.4 219.5 220.6 220.7 220.8 221.4 201.2 10.5 203.2 204.1 204.5 204.7 205.8 206.0 206.2 206.9 10.6 10.5 10.6 10.6 10.2 10.1 5.3 5.1 4.9 304.9 312.3 320.6 325.4 142.0 143.6 148.1 157.6 162.1 329.9 165.9 307.1 10.1 336.1 341.4 10.1 344.5 175.6 177.4 171.9 25.4 162.9 163.6 164.2 163.0 163.3 164.0 164.2 165.7 167.1 63.2 63.8 66.4 70.9 74.0 76.3 79.4 82.0 83.4 BILLIONS) YEAR 55.2 17.6 2.1 -1.9 37.6 1977--1 II III IV 14.8 10.4 13.1 16.9 10.5 4.6 3.9 2.9 1.2 0.8 0.4 0.2 1.8 -0.2 -1.2 -0.8 4.5 5.7 9.2 14.0 1978-1 17.6 1.2 -0.5 0.1 0.1 -0.2 -0.2 -0.6 -0.1 0.3 0.2 -0.2 197 12, (S BILLIONS) 197T*-AUG. SEPT. OCT. NOV. DEC. 197--JAN. FEB. MAR. APR. CHANGES ($ MAY Memo: Large Indvidual Nonrofit Nonprofit 3 2 CONFIDENTIAL (FR) CLASS II-FOMC 12.2 QUARTERLY AVERAGEs 16.4 5.9 13.5 3.4 6.6 3.3 0.4 15.2 1.1 1.0 -0.7 MONTHLY AVERAGES 1977--EPT. OCT. NOV. DEC. 1978--JAN. FEB. MAR. APR. 4.0 6.0 8.1 4.9 5.6 6.3 5.3 3.8 NOTEs COLUMNS 1i) 12) AND (9) ON AGGREGATES. FIGURES IN COLUMNS (11, DERIVED FROM DATA REPORTED BY SMALL GOVERNMENTAL UNITS-COLUMNS (4) AND WEDNESDAY BY LARGE COMERCIAL BANKS SNIPS. 1.8 0.7 -0.1 0.1 1.1 0.1 0.1 0.6 -0.1 0.1 0.0 -0.4 -0.1 0.0 0.0 -0.1 2.2 5.2 8.3 4.8 4.5 6.2 5.3 3.1 1.6 4.5 9.5 4.5 3.8 6.0 3.7 1.8 0.7 0.6 -1.2 0.3 0.7 0.2 1.5 1.4 THIS TABLE CORRESPOND TO COLUMNS (4,. (6), AND (1), RESPECTIVELY, ON TABLE 1-MONETARY (2), AND (61 REFLECT DAILY DATA REPORTED BY MEMBER BANKS, WITH ESTIMATES FOR NONMEMBER BANKS MEMBER BANKS, BENCHMARKED TO NONMEMBER CALL REPORT FIGURES. SAVINGS DEPOSITS OF BUSINESS AND (5--- AND LARGE DENOMINATION TIME DEPOSITS -- COLUN (7)--REFLECT BREAKDOMNS REPORTED EACH BLOWN UP TO REPRESENT DEPOSITS AT ALL COMMERCIAL BANKS ON THE BASIS OF CALL REPORT RELATION- CONFIDENTIAL (F.R.) CLASS II-FOMC TABLE 2 BANK RESERVES ACTUAL AND CURRENT PROJECTIONS, SEASONALLY ADJUSTED BANK RESERVES Period Total Reserves Nonborrowed Reserves MAY 12, 1978 REQUIRED RESERVES Monetary Base Total Required Private Demand Total Time Deposits Gov't. and Interbank MONTHLY LEVELS-$MILLIONS 36,933 1978-FEB. MAR. APR. MAY PERCENT 36,667 36,979 137,349) 36,528 36,339 36,423 135,7901 130,157 130,484 131,363 (132,786) 36,692 36,468 36,803 (37.091) 13,030 13,240 13,293 113,409) 21,795 21,420 21,598 (21,872) 1,867 1l808 1,912 1 1,810) ANNUAL GROWTH QUARTERLY 1977-3RD QTR. 4TH QTR. 8.0 7.1 3.9 7.8 9.2 9.6 7.3 7. 10.1 5.2 3.8 13.5 1978-1ST QTR. 5.8 8.6 7.8 5.7 -1.1 12.8 1977--3RD QTR. 4TH QTR. 7.3 6.1 1.7 3.5 8.6 9.1 6.8 6.3 8.1 6.1 5.2 9.1 1978-1ST 8.5 9.6 8.3 3.6 12.8 QUARTERLY-AV QTR. 14.5 MONTHLY ( 1978-FEB. MAR. APR. MAY APR.-MAY WEEKLY ( ( 11.2) I 13.7 -6.2 2.8 -20.9) -9.1) 6.9 3.0 8.1 13.0) 11.8 -7.3 11.0 9.4) ( 15.21 ( 12.3 19.3 4.b 10.51 10.6) 10.2) ( 12.7) ( 7.7) 10.6 -20.6 10.0 LEVELS-$MILLIONS 1978-APR. MAY NOTEt 10.9 -8.6 10.2 12.0) 131,525 36,608 369639 37,076 36,742 21,308 21,522 21,625 21,782 13,321 13,300 13,294 13,258 1,978 1,816 2.157 1,703 132,353 132.361 36,964 37.044 21,723 21.852 13,304 13.342 1,937 1.849 130,977 130,496 131,776 36,777 36,611 36.456 37,143 35,968 37,329 37,430 35,664 35,742 5 12 19 26 36,915 36,627 37,381 3 10 a RESERVE SERIES HAVE BEEN ADJUSTED TO REMOVE DISCONTINUITIES DATA SHOWN IN PARENTHESES ARE CURRENT PROJECTIONS. a ASSOCIATED WITH 3 CHANGES IN RESERVE _______________ REQUIREMENT RATIO. STRICTLY CONFIDENTIAL (FR) CLASS II - FOMC MAY 12, 1978 TABLE 3 NET CHANGES IN SYSTEM HOLDINGS OF SECURITIES 1/ ($ million, not seasonally adjusted) Change 2/ 1 - 5 789 579 797 3,284 3,025 2,833 -490 7,232 1,280 -468 863 4,361 1,164 2,126 886 186 1977--Qtr. Qtr. Qtr. Qtr. 5 - 10 1,059 864 3,082 1,613 891 1,433 1,631 9,273 6,303 7,267 6,227 10,035 -1,358 -46 -154 1,272 3,607 -2,892 1,680 959 1,021 1,001 2,738 3,666 4,273 -643 -4,771 4,175 -2,331 34 -555 -1,133 -736 ---4,474 2,996 3,568 -71 -2,717 2,233 -7,149 4,141 1,874 758 167 129 196 1,070 642 553 1,582 1,415 1,747 6,202 5,187 4,660 165 152 128 108 539 500 434 1,510 1,048 - Hoing Total 10 -2,655 345 1,123 459 247 1977--Nov. Dec. -736 2,798 93 628 166 108 100 Apr. 1,670 5 5 - 10 Ovr 10 592 400 1,665 824 469 792 Total 5/ 556 Mar. -627 -2.695 668 1 year 1,001 1978--Jan. Wi 2,175 1978--Qtr. I Feb. 1978--Mar. Apr. May LEVEL--May 10 (in billions) 1/ 2/ 3/ 4/ 5/ 6/ 147 235 191 145 671 -- -- -- -- -- -- -- -- -- -- -- -- -54 -1,024 - ---- --- -- -- 248 - 448 -- 275 -- 41 365 95 93 235 191 145 S - - -- -- -- -- -- -- --- --- --- 2,341 671 - - 53 14.3 101 29.9 74 7.9 62.2 1,016 79 -7,652 636 1,693 2,671 - - - - -- - - - 4.0 1.6 2,284 238 -415 519 10.1 -1,026 -1,474 -4,050 612 3,386 2,615 -- S 238 -862 351 -44 6/ 1,004 -108 1,499 -563 594 100 42.2 707 1,618 100 -- 145 177 -- 5 12 19 26 3 10 17p 24 31 --386 -- 1 8 15 22 29 Net RP's Total vr 325 171 96 166 1 year Net Change Outright Federal Agencies Net Purchases 4/ Treasury Coupons Net Purchases 3/ Treasury Bills Net 1.5 .9 7.9 112.3 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 notes acquired in exchange for maturing bills. Excludes redemptions, maturity shifts, rollovers of maturing coupon issues, and direct Treasury borrowing from the System. Outright transactions in market and with foreign accounts only. Excludes redemptions and maturity shifts. In addition to net purchases of securities, also reflects changes in System holdings 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 (-). STRICTLY CONFIDENTIAL (FR) CLASS II - FOMC MAY 12, 1978 TABLE 4 SECURITY DEALER POSITIONS AND BANK POSITIONS (millions of dollars) U.S. Govt. Security Dealer Positions BillsCoupon BillsIssues Underwriting Syndicate Positions Corporate Bonds Muniipal Bonds cess** Member Bank Reserve Positions Borrowing at FRB** Basic Reserve Deficit** e s s Reserves easonal Seasonal Total 8 New York rk38 8 ther 38 Others 1977--High Low 7,234 1,729 3,017 -1,445 513 -111 1,861 20 131 8 -9,151 -4,234 1978--High Low 5,625 *1,249 2,043 *-351 370 120 592 172 59 25 -8,224 -3,993 -14,602 1977--Apr. May June 4,567 3,072 4,752 696 123 206 192 213 154 73 206 262 14 30 54 -6,586 -5,693 -5,341 -11,409 -10,175 -10,332 July Aug. Sept. 3,899 2,533 4,812 -309 -933 -313 275 200 209 323 1,084 626 60 L02 L12 -6,391 -5,581 -7,333 -11,012 -11,452 -11,120 Oct. Nov. Dec. 4,142 3,617 4,257 -360 610 804 210 251 193 1,305 863 570 L12 83 55 -6,480 -6,971 -7,403 -11,511 -11,825 -11,350 1978--Jan. Feb. Mar. 4,127 3,418 2,713 327 1,492 740 268 243 200 484 406 328 32 49 47 -6,047 -4,980 -6,778 -12,299 -12,603 -11,060 Apr. *3,183 *-183 177p 55 7 -6,220p -12,997p 22 29 2,176 2,807 2,923 2,705 2,158 1,577 1,290 891 450 390 59 47 40 47 51 -4,836 -6,932 -7,537 -7,525 -5,510 -11,655 -11,783 -11,771 -11,473 5 12 19 26 4,398 4,083 *3,767 *1,325 45 37 36 49p -6,383 -8,224 -6,336 -5,356 -10,673 -14,602 -13,831 -12,667 3 *1,624 *1,249 60p 72p - ,81 p 5 056 - , p 1978--Mar. Apr. May 1 8 15 10 44 p 2 -310 *-351 *33 *-287 *189 5 50p 281 185p 365p 290p 1,665p 1,688p p 3 9 -13,975 - 8,206 - 8,533 - 9,237 21 -12, 0p 2 24 9 -1 , p 17 24 31 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. STRICTLY CONFIDENTIAL (FR) CLASS II - FOMC MAY 12, 1978 TABLE 5 SELECTED INTEREST RATES (per cent) Short-Term Treasury CD's New Comm. Federal Bills Issue- Paper Funds NYC 90-19 Da Fund90-Day 1-Year 9 Bank Pre Prime Rate U.S. Govt.-Constant Maturity Yields 3-yr 7-yr 20-yr Long-Ter Corp-Aaa i1 Utility ond New Recentl Bond Issue Offere Buyer Home Mortgages Pi Secondary Mrket Prim. F GNMA Cony. Auc. ec. (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) 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 8.39 7.56 1978--High Low 7.32 6.58 6.50 6.16 7.21 6.55 7.13 6.65 6.96 6.68 8.21 7.75 8.07 7.40 8.24 7.72 8.43 8.01 8.93 8.61 8.93 8.48 5.99 5.58 9.48 8.98 9.52 9.13 8.85 8.43 1977--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. Mar. 6.70 6.78 6.79 6.44 6.45 6.29 6.80 6.86 6.82 6.82 6.77 6.73 6.75 6.76 6.75 7.93 8.00 8.00 7.61 7.67 7.70 7.86 7.94 7.95 8.14 8.22 8.21 8.68 8.69 8.71 8.60 8.67 8.67 5.71 5.62 5.61 9.02 9.15 9.20 9.17 9.31 9.35 8.56 8.64 8.60 6.89 6.29 6.96 6.84 6.82 8.00 7.85 8.06 8.32 8.90 8.85 5,80 9.36 9.44 8.71 1978--Mar. 1 8 15 22 29 6.80 6.76 6.77 6.77 6.82 6.41 6.33 6.27 6.22 6.27 6.85 6.83 6.81 6.76 6.84 6.75 6.75 6.73 6.70 6.70 6.75 6.75 6.75 6.75 6.76 8.00 8.00 8.00 8.00 8.00 7.71 7.69 7.64 7.65 7.79 7.95 7.94 7.91 7.90 8.02 8.21 8.21 8.17 8.17 8.27 -8.70 -8.61 8.83 8.70 8.65 8.64 8.64 8.75 5.63 5.58 5.58 5.59 5.69 9.15 9.15 9.23 9.23 9.25 -9.36 -9.33 -- 8.61 8.63 8.55 8.53 8.68 Apr. 5 12 19 26 6.86 6.74 6.78 7.00 6.39 6.35 6.20 6.22 6.94 6.95 6.88 6.99 6.75 6.83 6.83 6.95 6.76 6.80 6.79 6.86 8.00 8.00 8.00 8.00 7.82 7.81 7.83 7.95 8.04 8.04 8.04 8.13 8.31 8.33 8.30 8.36 8.88 8.88 8.93 8.92 8.82 8.84 8.84 8.91 5.76 5.74 5.79 5.89 9.28 9.33 9.38 9.43 9.44 -9.44 -- 8.70 8,67 8.67 8.81 May 3 10 17 24 31 7.27 7.32 6.38 6.39 7.16 7.21 7.05 7.13 6.91 6.96 8.00 8.21 7.99 8.07p 8.16 8.24p 8.40 8.43p -8.87p 8.90 8.93p 5.98 5.99 9.48 n.a. 9.52 -- 8.80 8.85 Daily--May 4 11 7.27 7.36p 6.33 6.32 7.13 7.26 --- 6.94 7.02 8.00 8.25 7.97 8.08p 8.14 8.24p 8.39 8.41p Apr. 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 for 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. MAY 12, 1978 1-A MONEY AND CREDIT AGGREGATE MEASURES Appendix Table Credit Period Total Nonborrowed Money Stock Measures I Bank Reservesd Monetary Base Total Loans and Invest- MI M2 M3 M4 M5 M6 M7 5 6 7 8 9 10 11 9.6 10.3 11.7 10.4 9.8 11.4 10.0 10.0 11.9 ments 2 S1 4 3 (PER CENT ANNUAL RATES OF GROWTH) ANNUALLY ANNUALLY: 1975 1976 1977 -0.3 1.0 5.2 3.2 1.2 2.7 5.9 7.0 6.3 3.9 8.0 10.9 4.4 5.7 7.8 b.3 10.9 9.8 11.0 12.8 11.7 6.5 7.1 10.0 2/ SEMI-ANNUALLYi 2ND HALF 1976 3.0 3.2 6.6 6.9 5.5 10.b 12.7 7.8 10.8 9.8 9.9 1ST HALF 2ND HALF 1977 1977 3.5 6.8 2.9 2.6 7.3 9.0 11.6 9.7 7.6 7.7 10.1 9.0 11.3 11.4 9.3 10.2 10.8 12.0 10.2 12.1 10.7 12.4 2ND QTR. 3RD QTR. 4TH OTR. 1977 1977 1977 3.3 8.0 7.1 1.4 3.9 7.8 7.9 9.2 9.6 12.6 8.6 8.3 1.5 9.0 6.2 8.5 10.1 7.0 9.9 12.7 9.1 8.4 9.6 11.2 9.8 12.3 11.6 8.5 12.9 11.7 9.2 12.5 13,0 1ST QTR. 1976 5.8 8.6 7.6 10.5 4.0 6.2 6.9 9.3 8.8 9.5 9.3 1977 1977 1977 2.9 7.3 6.1 1.8 1.7 3.5 7.3 8.8 9.1 13.3 9.6 9.3 6.1 b.1 7.2 9.0 9.9 8.0 10.2 11.9 10.6 8.2 9.5 10.7 9.6 11.6 12.1 9.0 11.4 12.5 9.9 11.4 13.1 1ST QTR. 1978 8.5 14.5 9.6 8.5 5.0 6.4 7.4 10.0 9.5 10.1 10.6 1977--APR. MAY JUNE JULY AUG. SEPT. OCT. NOV. DEC. 7.9 1.3 0.6 15.5 7.8 0.5 9.8 5.3 5.9 9.0 -3.3 -1.4 13.5 -17.4 15.7 -13.4 20.9 16.1 10.2 6.4 7.1 11.1 8.4 8.0 10.0 8.1 10.4 15.7 12.0 9.6 9.5 12.3 3.8 13.5 11.8 -0.7 13.9 1.5 7.1 11.8 6.2 8.7 10.9 0.4 7.2 10.8 5.5 9.1 13.5 7.7 9.0 9.7 5.4 5.7 11.0 8.1 10.3 14.0 11.7 12.2 11.8 7.6 7.6 9.1 7.0 8.9 11.9 7.5 9.2 12.5 11.2 9.6 9.9 8.9 10.2 12.9 11.5 12.2 13.3 11.3 9.8 9.4 7.3 8.6 13.1 12.6 12.6 13.7 11.4 9.6 10.2 8.0 9.1 13.0 12.1 12.1 14.4 13.0 11.1 1978--JAN. FEB. MAR. APR.P 15.2 10.9 -8.6 10.2 18.3 13.7 -6.2 2.8 13.5 6.9 3.0 8.1 12.1 10.1 9.1 21.5 9.6 -1.1 3.5 19.1 8.9 4.4 5.3 11. 8.7 5.5 6.2 9aL.9 11.3 8.2 8.3 10.2 7.7 6.2 10. 4 11.4 8.8 6.0 11.8 8.4 7.5 o 7 QUARTERLYI QUARTERLY-AV 2ND QTR. 3RD OTR. 4TH QTR. MONTHLY 1/ 2/ P - BASED ON DATA ADJUSTED FOR CHANGES BASED ON QUARTERLY AVERAGE DATA. PRELIMINARY IN RESERVE 1 REQUIREMENTS. ._ . MAY Appendix Table 1-B 12, 1978 MONEY AND CREDIT AGGREGATE MEASURES SEASONALLY ADJUSTED, BILLIONS OF DOLLARS Bank Reserves 1V Period Total Non-borrowed lnk Credit Monetary Base Money Steek Measures Total Loans and M1 M2 M3 Invest. I - - ments a IIIIIII 6 M 4 M5 N6 M7 a.a.- 7 ANNUALLY: 33,969 34,441 36,143 33,839 34,388 35,573 110,345 118,062 127,973 725.5 788.2 870.0 294.5 312.6 336.7 664.1 739.6 807.6 1091.8 1235.6 1374.1 745.4 802.3 881.6 1173.2 1298.3 1448.1 1307.3 1436.7 1600.6 1350.3 14 4.0 1662.5 34,766 34, 05 34,821 34,693 34,599 34,559 120,807 121,448 122,163 819.7 827.9 834.5 322.0 322.4 324.3 764.9 768.4 774.2 1282.2 1290.9 1302.0 826.5 831.3 837.5 1343.8 1353.8 1365.3 1486.9 1495.9 1506.6 1539.4 1549.7 1561.4 JULY AUG. SEPT. 35,271 35,501 35,517 34,948 34,440 34,892 123,294 124,155 124,984 841.1 849.7 852.4 327.5 329.2 331.6 782.9 787.9 793.8 1317.2 1330.0 1343.5 845.8 851.1 657.6 1380.0 1393.2 1407.4 1523.0 1539.0 1555.1 1578.3 1594.2 1610.3 OCT. NOV. DEC. 35,808 35,965 36,143 34,503 35,103 35,573 126,025 126,87 127,973 862.0 870.5 870.0 334.6 334.7 336.7 800.2 803.8 807.6 1356.7 1365.5 1374.1 866.5 674.6 881.6 1423.0 1436.4 1448.1 1572.9 1587.9 1600.6 1629.6 1647.3 1662.5 1978--JAN. FEB. MAR. 36,600 36*933 36,667 36,116 36,528 36,339 129,409 130,157 130,484 878.8 886.2 893.3 339.4 339.1 340.1 813.6 816.6 820.2 1384.1 1390.5 1397.7 689.9 896.0 902.2 1460.4 1469.8 1479.8 1615.8 1627.6 1638.5 1678.8 1690.5 1701.1 36,979 36,423 131,363 909.3 345.5 827.9 1409.2 911.3 1492.6 1652.1 1714.8 8 15 22 29 369510 36,611 36,807 36,689 36,114 36,363 36,527 36,303 129.747 130,258 130,845 131,007 339.3 33b.5 340.7 341.3 818.7 818.2 821.6 821.9 900.5 900.3 903.6 904.2 5 12 19 26P 36,915 36,627 37,381 36,777 36,611 36,456 37,143 35,908 130,977 130,496 131,776 131,525 341.8 344.0 344.8 346.5 823.7 825.9 627.8 829.5 905.6 908.4 910.9 913.9 3P 37,329 35,664 132,353 350.5 833.7 919.4 1975 1976 1977 MONTHLY: 1977--APR. MAY JUNE APR.P MEEKLY1 1978-MAR. APR. MAY I *a aI * I I WEEKLY DATA MONTHLY DATA ARE DAILY AVERAGES. MEEKLY DATA ARE DAILY AVERAGES FOR STATEMENT WEEKS. M39 M5, M6, M7, TOTAL LOANS AND INVESTMENTS AND THRIFT INSTITUTION DEPOSITS. 1/ BASED ON DATA ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS. DATA SHOWN IN MILLIONS OF DOLLARS. NOTES: S I ARE NOT AVAILABLE FOR MAY APPENDIX TABLE 2-A 12, 1978 COMPONENTS OF MONEY STOCK AND RELATED MEASURES 5 6 7 8 11 12 (Per cent annual rates of growth) 2/ ANNUALLY: 15.0 11.2 1975 1976 1977 1 7.5 2 5.0 I11.1 7.8 7.4 11.4 -6.4 -23.4 12.8 15.3 15.5 14.2 19.5 18.8 19.4 33.8 5.5 10.9 11.7 -0.7 13.9 24.6 SEMI-ANNUALLY: 2ND HALF 1976 4.7 9.3 14.9 1 9.8 10.6 -21.7 15.5 18.1 -4.6 13.0 1ST HALF 1977 2ND HALF 1977 7.2 7.0 10.4 11.8 11.9 9.9 II5.3 6.4 8.9 13.2 0.6 24.9 12.9 14.5 16.6 20.6 2.1 19.6 25.6 21.2 2ND QTR. 1977 3RD QTR. 1977 4TH 0TR. 1977 8.9 9.9 14.5 9.2 10.8 7.6 15.5 0.9 1.3 12.5 10.8 13.3 7.1 3.2 64.0 11.6 16.2 11.6 15.7 21.7 18.8 -14.4 31.0 19.4 29.8 2.9 48.6 1ST QTR. 1978 QUARTERLY-AV: 12.6 7.8 2.4 12.6 43.2 6.9 17.9 27.4 4.5 2ND OTR. 1977 3RD QTR. 1977 4TH TQR. 1977 8.3 10.3 13.0 9.7 11.2 8.5 B.8 -1.9 4.5 44.9 11.6 14.6 13.9 14.9 5.4 10.5 14.6 11.4 20.0 -1.2 11.7 26.7 39.3 11.2 30.4 1ST QTR. 13.1 7.5 k.2 12.0 50.0 8.0 18.2 25.6 22.9 1977-APR. MAY JUNE JULY AUG. SEPT. OCT. NOV. DEC. 6.0 10.5 10.1 11.9 8.3 9.2 13.7 18.3 10.9 8.5 8.4 10.5 14.9 8.4 8.9 8.8 9.3 4.6 3.9 5.7 14 3.0 b.2 6.3 14 3.0 3.8 3.5 3.5 6.3 10.9 20.1 22.8 1.5 7.9 13.3 16.0 8.2 -11.6 25.3 7.6 -9.5 7.6 11.4 48.9 61.3 52.5 10.9 11.6 12.0 14.3 17.1 16.6 14.0 11.0 9.3 14.7 1.7 -24.1 -21.1 19.7 44.0 27.2 29.9 19.4 8.0 35.3 14.5 17.2 19.8 19.5 24.7 21.5 15.8 18.2 1978--JAN. FEB. MAR. APR.P 12.3 13.7 11.4 8.1 8.4 6.5 5.7 b.O 0.5 0.5 3.3 10.5 14.7 12.2 7.9 37.3 48.8 39.3 20.5 7.9 6.0 6.8 7.0 17.9 15.2 20.0 14.7 41.2 30.6 9.0 4.4 21.3 -3.6 -3.8 1.9 QUARTERLY: 1978 7.3 20.1 MONTHLY: 8.4 Cn *. .. i S n *1/ GROWTH RATES ARE BASED ON ESTIMATED MONTHLY AVERAGE LEVELS DERIVED BY AVERAGING END OF CURRENT PREVIOUS MONTH REPORTED DATA. 2/ BASED ON QUARTERLY AVERAGE DATA. P - PRELIMINARY. . - MONTH a - AND ENO 29.7 22.3 10.9 -2.2 0.0 34.8 54.9 50.5 - OF APPENDIX TABLE 2-B MAY COMPONENTS OF MONEY STOCK AND RELATED MEASURES Mutual Savings Bank Other Than CD's Savings Other Deposits ___Total Credit Union & S&L Shares!j Time and Savings Depoits Currency Demand Period ShortSTerm U.S. Shares Bonds 1Y Savings Gov't Sec ye Other Private Short- Non Non Deposit Total Total Gov't term Ass Funds Demand Depo Y/ 2 1 3 4 5 6 7 8 9 11 10 12, 1978 ] 1S 12 L4 ANNUALLY: 73.7 450.9 489.7 544.9 369.6 160.5 209.1 66.9 43.0 225.1 251.4 394.8 456.9 67.2 201.9 219.5 81.3 62.7 74.0 33.0 427.0 39.1 88.5 220.8 231.9 248.2 519.7 46.8 71.9 76.6 66.6 75.8 47.3 61.9 83.1 83.8 84.2 238.9 238.6 240.1 504.5 508.9 513.2 442.9 446.0 212.0 213.0 213.0 230.9 233.0 236.9 61.6 62.9 63.3 476.0 41.3 41.8 42.4 73.4 73.8 69.7 480.6 485.4 52.5 53.8 JULY AUG. SEPT. 85.1 85.5 86.3 242.3 243.7 245.3 518.3 455.5 458.7 525.9 462.1 214.1 217,0 218.8 241.4 241.7 243.3 62.8 63.2 63.8 491.2 498.2 505.1 43.1 521.9 OCT. NOV. DEC. 87.1 247.5 247.0 248.2 531.9 465.5 469.1 470.9 219.5 219.4 219.5 246.0 66.4 70.9 74.0 511.0 515.7 519.7 45.5 46.1 550.5 474.2 477.5 480.1 220.6 220.7 220.8 76.3 259.3 79.4 82.0 523.1 525.7 528.7 47.5 556.8 562.1 253.6 256.7 90.6 250.1 249.1 249.5 91.2 254.3 565.9 482.4 221.4 261.0 83.4 531.8 8 15 22 29 90.3 90.5 90.9 91.0 249.1 248.0 249.8 250.3 561.2 561.8 562.9 562.8 479.3 479.6 220.9 220.8 220.8 220.8 258.4 258.8 260.1 259.7 5 12 19 26P 90.9 90.8 91.1 91.4 250.9 253.2 253.7 255.1 564.0 564.4 566.1 567.5 481.9 481.9 482.9 483.0 221.2 222.0 221.4 221.1 3P 91.8 258.7 568.9 483.1 221.3 1975 1976 1977 80.7 470.9 33.8 51.1 61.4 8.3 11.2 11.4 52.3 53.8 53.2 10.8 10.6 10.1 MONTHLY: 1977--APR. MAY JUNE 87.7 88.5 b9.3 90.0 1978--JAN. FEB. MAR. APR.P 540.0 544.9 449.9 74.2 68.3 67.1 74.7 75.1 75.4 68.2 70.7 72.3 55.3 55.2 55.2 53.6 55.9 57.5 11.8 10.2 10.7 75.8 74.1 76.2 76.6 75.3 56.8 59.4 61.9 58.4 60.1 61.4 10.3 6.7 11,4 77.0 77.4 77.8 78.4 80.4 81.0 63.0 48.1 48.9 62.6 66.0 66.9 67.2 9.7 7.5 7.9 49.5 78.2 81.3 62.7 65.5 8.3 81.8 82.2 82.0 82.3 68.7 68.9 65.0 66.4 7.3 7.0 9.4 7.6 260.7 259.9 261.5 261.9 82.1 82.5 83.2 84.4 67.5 66.3 61.8 67.0 8.4 9.0 8.5 8.1 261.8 85.8 249.7 251.4 43.8 44.7 46.8 75.8 54.8 62.8 WEEKLY: 1978-MAR. APR. MAY I I 480.9 480.6 7.5 - - ESTIMATED MONTHLY AVERAGE LEVELS DERIVED BY AVERAGING END OF CURRENT MONTH AND END OF PREVIOUS MONTH REPORTED DATA. SECURITY RP'S AND INCLUDES PRIVATE DOMESTIC NONFINANCIAL INVESTORS' HOLDINGS OF COMMERCIAL PAPER, BANKERS ACCEPTANCES, MONEY MARKET MUTUAL FUND SHARES. 3/ BORROWINGS BY BANKS FROM OTHER THAN COMMERCIAL BANKS IN THE FORM OF FEDERAL FUNDS PURCHASED, SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE, AND OTHER LIABILITIES FOR BORROWED MONEY, PLUS GROSS LIABILITIES TO OWN FOREIGN BRANCHES (EURODOLLAR BORROWINGS), LOANS SOLO TO AFFILIATES, LOAN RPS, AND OTHER MINOR ITEMS. INCLUDES TREASURY DEPOSITS AT MEMBER BANKS AND FEDERAL RESERVE BANKS. 4/ P - PRELIMINARY 1/ 2/
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