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Prefatory Note The attached document represents the most complete and accurate version available based on original copies culled from the files of the FOMC Secretariat at the Board of Governors of the Federal Reserve System. This electronic document was created through a comprehensive digitization process which included identifying the bestpreserved paper copies, scanning those copies, 1 and then making the scanned versions text-searchable. 2 Though a stringent quality assurance process was employed, some imperfections may remain. Please note that some material may have been redacted from this document if that material was received on a confidential basis. Redacted material is indicated by occasional gaps in the text or by gray boxes around non-text content. All redacted passages are exempt from disclosure under applicable provisions of the Freedom of Information Act. 1 In some cases, original copies needed to be photocopied before being scanned into electronic format. All scanned images were deskewed (to remove the effects of printer- and scanner-introduced tilting) and lightly cleaned (to remove dark spots caused by staple holes, hole punches, and other blemishes caused after initial printing). 2 A two-step process was used. An advanced optical character recognition computer program (OCR) first created electronic text from the document image. Where the OCR results were inconclusive, staff checked and corrected the text as necessary. Please note that the numbers and text in charts and tables were not reliably recognized by the OCR process and were not checked or corrected by staff. Content last modified 6/05/2009. October 24, CONFIDENTIAL (FR) 1969. MONEY MARKET AND RESERVE RELATIONSHIPS Recent developments (1) Shortly after the last Committee meeting, market expectations turned sharply in favor of a general decline in interest rates. As a consequence, professional and retail demands for securities pushed long-term rates markedly lower. Yields on long-term U.S. Government bonds declined by as much as 50 basis points over a two week period, while corporate and State and local yields dropped around 26 basis points. In recent days, however, the bond market rally has faded, and yields have backed up somewhat. Private short-term market rates have moved lower, by as much as three-eights of a percentage point, since the last meeting of the Committee. In the case of commercial paper, this decline occurred despite a marked increase in the issuance of bank-related commercial paper. (2) Despite two Treasury tax-anticipation bill auctions totaling $5 billion--one on October 8 and one on October 23--Treasury bill rates generally showed little change on balance over the last three weeks. The market was in a fairly strong technical position as a result of earlier foreign official bill purchases, and was readily able to absorb the new Treasury offerings. The foreign purchases were subsequently reversed in part, as some speculators in German marks cashed in their gains, but the bill market was partly sheltered from the impact as the I (M I, I l lMon y 'IiI I I ndic Iior i k S ii, I' i t I rv ., SI r" . i I ,,I . Oct 192 25'i - 127 1969--lanuars February Marrh April May lune Iuly August September p October (pro 1969--Aug 6 13 20 27 Sept I)2 - - 91 - 80 - 635 -844 -1.116 -1 078 -1 .045 997 7' -1,015 839 996 -1.162 - 992 1 nj, Ii , . I iJ.isr I ,nd I nd In 1l68--qeptembier Ot toher Novembe r Dei ember 1 I i I I iv , t. t , Iii R I I -, s I i I' i 1 INA% I %I MARKI I *I \ inlk- ill P, IN, PI ( IVr n l O<i, ir . v w ll )( , wt k y Iv t I i).s of daily I rLuri ) loud i Y il Ids I I low of Reserves. no ilh it It ii :' ii hi ll I ' (iiv I rl nt (.12' yr ) ( I rl Ni nhi N( w I I I rowed It sl i Vt s tAI i ) (A.)4 (in 2 4 of J ll mi, on dollars) Money Supply S.A. Time Deposit 3/ (In . bhillions of dol lars) . . . . . . . . . (i . 19 5. 15 5.45 5.96 1.28 i.27 h6.41/ 6.61 6.79 4.21 5.44 5.56 5.88 715 836 8 17 1.031 1.359 1.355 1,311 1.211 1.026 1,191 1,090 1.329 1.221 1 204 6.10 6 64 6.79 7 41 8.67 8.90 8 61 9.19 9 15 n.a. 9 S7 9.18 8.79 8.82 6.14 6.12 6.02 6 11 6.04 6.44 7.00 6.98 7.09 n.a. 6.99 7.04 6.86 7.04 5.99 6.11 6.22 6.03 6.11 6.28 6.27 6.22 6.55 n.a. 6.21 6.19 6.20 6.24 6.92 6.91 7.17 7.17 7.22 7.58 7.63 7.65 7.98 7.90 7.57 7.53 7.61 7.82 4.58 4.74 4.97 5.00 5.19 5.58 5.60 5.74 5 83 5 80 5.70 5.71 5.71 5.80 + - + + + + 4. 1 5 4. 0 + + + + 0.4 0.4 1.8 1.2 + + + + 2.6 3.0 2.7 2.8 1.2 0.3 2.5 1.2 0.3 2.5 - 4.6 - 2.7 + 0.4 - 1.9 0.9 - 0. 1 - 1.5 + 0.7 4. 2.1 3.2 2.8 3.2 + + + + + + + - 1.0 0.5 0.5 1.3 0.2 0.7 0.} 0.2 - 1.7 0.8 0.1 - 0.6 0.9 3.1 3.2 0.4 06 + 0.4 - + 0.4 - 0.6 -0.7 - 0.5 - 0.5 -1.1 3 10 17 24 - - 49 -886 901 1.240 740 1,018 1,105 9 57 8.57 9.07 9.61 7.01 7.09 7.11 7.13 6.35 6.45 6.49 6.60 7.9Q(Y 8.02** 8.04 8.13 5.80 5.85 5.85 5.82 + + - 0.7 2.1 3.4 2.1 + + - 0.6 0.2 0.3 1.3 + + - 0.1 0.1 0.3 0.2 1 8 p. 15 p 22 p -1 -1 - 1,436 964 1 348 I 015 9.11 9 43 9 68 8 75 7.07 7.00 7 02 6.94 6.76 6.65 6.46 6.29 8.22 8.10 7.95 7.82 5.83 5.80 5.75 5.80 + 0.8 0.4 1.7 2.; + 1.4 - 1.0 + 1.7 + - 0.3 0.4 0.1 0.5 H1S9 116 873 175 895 +331 II Year 1968 Se, ond Half 1968 First Half 1969 - Recent variation in growth 7/3/68 - 12/18/68 12/18/68 - 10/1/69 ** - Bank rredit Proxy 5 5 + 6.0 +10 2 - 3.7 Annual rates of increase + 7.9 + 9.0 + +10.7 +13.4 + + 0.7 - 3.5 + +11.0 9 - /4. +12.9 - 3.4 Averages 2/ 3/ 4/ Tot Il R( srves 78 92 'l 81 6 02 49I2 ',58 i'l 7' -II 1/ Bank Credit and Money. iiiH i iior 210 218 779 548 529 1,034 5 58 5.77 7.45 5.36 5.42 6.17 5.45 5.44 6.12 6.47 6.50 7.20 - 201 - 839 516 1.091 5.90 7.98 5.34 6.47 5.40 6.27 6.47 7.46 4.20 4.22 4.99 p Average of actual number of days in period carry arry i 10-vier -all prot i tlon. - issues protect ion, 10-year tall 5-year and i rr, it Includes issue( Time deposits adjusted at all commercial banks case of weekly periods, the first week shown Base is change for month preceding specified period or in Preliminary n 11 member I'ank depisits resulting t rin withdrawal of a large < untrv hank .n1llnp ed ' Ref lec ts gO I'Plete tage annual rilte are ad justed ti eliminate this break in series. from Ssctem membershlp o Lrbhei 24 , 1969 +14.8 - 5.3 4/ 7.2 7.0 4.3 + 5.9 + 1.4 +11.5 +17.3 - 4.0 +18.6 - 6.8 adutd Sr A. - Sesnal S A. - Seasonally adjusted. -2System purchased a substantial volume of these bills, and also made some market purchases, for reserve supplying purposes. The 3-month bill was most recently bid at around 7 per cent, near the lower end of the range specified in the last blue book and about the same as its level at the time of the last meeting. (3) In the previous blue book, total member bank deposits in October were projected to decline in a 5 - 8 per cent annual rate range. At present, on the basis of two weeks of preliminary and one week of partial data for the month, we estimate the decline to be in the slightly deeper range of 7 - 9 per cent. Euro-dollars and other non- deposit sources of funds appear to be offsetting about 1-1/2 percentage points of the decline in member bank deposits. A week ago, staff estimates of the proxy had suggested an even weaker performance for October. As a result the proviso clause of the directive was marginally in effect in the statement week ending October 22. (4) The performance of deposit components thus far this month, and also currency, has differed from earlier expectations, though most of the deposit variation has been mutually offsetting. U. S. Government deposits are declining considerably more than previously expected, but private demand deposits are stronger by about an equivalent amount and now appear likely to rise somewhat on average during the month, in contrast to a slight decline projected earlier. Reflecting the somewhat stronger private demand deposit performance, as well as greater growth of currency the money supply for October is now -3estimated to increase in a 1 - 4 per cent annual rate range. Total title and savings deposits have been running slightly weaker than anticipated, with the October average rate of decline now estimated in a 2 - 5 per cent annual rate range. All of the weakness relative to projections was in time deposits other than large CD's. (5) Net borrowed reserves at member banks during the past three statement weeks have fluctuated in a fairly wide $875 million to $1.2 billion range, and average borrowings in the $950 million to $1.4 billion range. The Federal funds rate also showed considerable fluctuation with the weekly average effective rate varying between 8-3/4 and 9-5/8 per cent. Money market conditions were influenced not only by the marginal implementation of the proviso clause, but also by the wide variations in the day-to-day needs for funds among major banks-arising in part, of course, from the Treasury's financing operations. For example, the basic reserve deficit of the major banks in New York (borrowings from the Federal Reserve and net Federal funds purchases less excess reserves) fluctuated between $650 million and $1.8 billion, while the deficit of the 38 major banks outside New York varied from about $2.7 billion to about $4 billion. (6) The following table summarizes annual rates of change in major deposit and reserve aggregates during recent periods. -4July '68Dec. '68 Jan. '69June '69 July '68Sept. '69 / Oct.'692 Total reserves 10.9 0.7 - 9.3 -10.0 Nonborrowed reserves 11.0 -3.7 - 4.8 -14.5 Total member bank deposits (Bank credit proxy) 13.4 -3.5 - 9.4 - 8.0 Proxy plus Euro-dollars 13.5 -0.2 - 6.2 - 8.0 n. a. - 4.3 - 6.5 3.0 - 0.5 Bank credit, as indicated by: Proxy plus Euro-dollars and other nondeposit sources n. a. Total loans and investments (as of last Wednesday of month) Money supply 15.0 7.0 Time and savings deposits Savings accounts at non-bank thrift institutions 17.3 6.4 4.3 -4.0 5.0 0.5 2.5 0.2 -13.3 - 3.5 2.0 n. a. Note: Dates are inclusive. Partly projected. p/ Prospective developments (7) For the second paragraph of the current economic policy directive, the Committee might wish to consider language along the following lines (alternative A): 'To implement this policy, System open market operations until the next meeting of the Committee shall be conducted with a view to maintaining the prevailing firm conditions in money and short-term credit -5markets; provided, however, that operations shall be modified if bank credit appears to be deviating significantly from current projections. This language is the same as that of the directive issued on October 7, 1969. (8) Prevailing firm conditions in the money and short-term credit markets might be taken to encompass ranges for the Federal funds rate of about 8-1/2--9-1/2 per cent, for member bank borrowings of $1--1-1/2 billion, and for net borrowed reserves of $900 million to $1.2 billion--in each case, the approximate ranges prevailing since the last meeting of the Committee. It should be noted that money market conditions in the last statement week were toward the easier end of the ranges, with the proviso (9) marginally in effect. Given the conditions specified in paragraph (8), the 3-month bill rate seems likely to fluctuate in a 6-3/4--7-1/4 per cent range. Market distribution of the most recent bill financing and probable further foreign bill sales will be putting upward pressure on the bill rate, but System reserve supplying operations--estimated at around $800 million over the next four weeks--and the current strong technical condition of the short bill market will work toward offsetting these upward rate pressures. (10) The recent $3 billion tax bill financing will be paid for on October 29, thus giving a sizable boost to the average level of U.S. Government deposits in November and to total member bank deposits. The latter are expected to grow on average at an annual rate in a 5 - 8 per cent range in November, supported by a 4 - 7 per cent annual rate -6of growth in nonborrowed and total reserves. Combining the member bank deposit growth expected in November with the 7 - 9 per cent rate of decline now estimated for October would result in little net change on average for member bank deposits over the two month period. Out- standing total member bank deposits also are expected to show little net change on average in December, as the anticipated November bulge of Government deposits fades. (11) Continued sizable inventory accumulation by business, in conjunction with diminishing profits and reduced liquid asset positions, may lead to takedowns of loan commitments at banks sufficient to keep outstanding business loans growing in November at a somewhat faster pace than in loan demands, the third quarter. Given the pick-up of business and with individual banksviewing the increase in U.S. Government deposits as temporary, outstanding funds obtained from non-deposit sources may increase over the next month; any such increase would be accounted for mainly by further growth of commercial paper issued by bank affiliates. The expected increase of all nondeposit sources, including Euro-dollars, would be the equivalent of adding about 1 - 2 percentage points at an annual rate to total member bank deposits. Thus, the bank credit proxy adjusted to include Euro-dollars and other non-deposit sources is projected to rise on average in November in 6 - 10 per cent annual rate range. -7(12) Time and savings deposits at banks are likely to decline in a 4 - 7 per cent annual rate range in November, largely because of continued weakness in the trend of consumer-type time deposits and in large CD's issued to domestic business and individuals. Since mid- September time deposits of foreign official accounts at U.S. banks have risen about $675 million. Most of this represents a one-time switching of BIS funds to U.S. banks. Head offices of U.S. banks can now offer slightly higher yields on foreign official time deposits than their branches offer on Euro-dollars, reflecting the somewhat lower reserve requirement on head office time deposits as compared with marginal deposits (above the base) obtained through foreign branches. As a result, there may be some continued increase in foreign official time deposits at head offices. (13) The money supply is expected to show little net change, on average, in November, Part of the October rise in the average may have reflected greatly enlarged activity in financial markets, particularly stock markets, during the last two weeks. The November projection assumes a more normal level of activity. (14) As noted in paragraph (1), sharp declines in bond yields during the past few weeks strongly reflected market expectations. With constraints on supplies of funds at most major types of financial institutions expected to persist, it seems likely that interest rates there is will move upward again unless /strong additional evidence as to a weakening of the economy, peace in Viet-Nam, or a shift in monetary policy. -8Indeed, in the last few days, long-term rates have risen, particularly in the minicipal bond market. Policy alternative (15) If the Committee should decide to move toward somewhat less firm money market conditions, it might wish to consider directive language along the following lines (alternative B): "To implement this policy, System open market operations until the next meeting of the Committee shall be conducted with a view to achieving slightly less firm conditions in money and short-term credit markets; provided, however, that operations shall be modified if bank credit appears to be deviating significantly from current projections. (16) The slightly less firm money market conditions to be sought might involve a Federal funds rate averaging around 8-1/4 to 8-1/2 per cent, member bank borrowings around $1 billion or a little less, and net borrowed reserves fluctuating around $800 million. Such a move, as it becomes evident to the market, could tend to moderate or even reverse the developing tendency of recent days for some interest rates to rise. The 3-month bill rate would probably move down in a 6-1/2 -- 7 per cent range. But the impact of so small a change in money market conditions on monetary aggregates would likely be minor over the nearterm, unless resulting market exuberance should carry interest rates sharply down, and the bill rate were permitted to fall well below the range specified. Assuming the bill rate remains within the range, however, we would not expect the November aggregatesto be more than a -9percentage point or two stronger than projected under alternative A of the directive. (17) Even a slight easing of money market conditions would probably lead over time to expectations of further easing and encourage banks to add more to loans and investments than otherwise, financing them at very short-term in the Federal funds, Euro-dollar, and commercial paper markets. In these circumstances, as the Federal Reserve provided the reserves to keep the Federal funds rate down, demand deposits would also tend to become somewhat stronger than otherwise. Thus, relative to the alternative A projections, bank credit and deposit expansion, might show a more noticeable strengthening in December than in November. Chart 1 MEMBER BANK RESERVES MONTHLY AVERAGES OF DAILY FIGURES I I 7 I I I I I I BILLIONS OF DOLLARS, SEASONALLY ADJUSTED 28.5 28.0 27.5 27.0 2 6 .0 26.5 < Am - 0 25.5 25.0 24.5 24.0 M J 1968 S D M J 1969 S D Chart 2 MEMBER BANK DEPOSITS AND LIABILITIES TO OVERSEAS BRANCHES BILLIONS OF DOLLARS TOTAL MEMBER BANK DEPOSITS (CREDIT PROXYJ SEAS ADJ WEEKLY AVERAGES OF DAILY FIGURES 302 298 294 290 286 2986----------------\------------ 2 282 278 274 --- - ------- E------------.,--- 270 14 LIABILITIES TO OVERSEAS BRANCHES [WEEKLY REPORTING BANKSJ 12 -NOT SEAS ADJ., 10 ^-- 4.------~ 1968 1969 Chart 3 MONEY SUPPLY AND BANK DEPOSITS SEASONALLY ADJUSTED WEEKLY AVERAGES OF DAILY FIGURES I I I I I I I I I BILLIONS OF DOLLARS 198 194 MONEY SUPPLY 190 186 182 TIME DEPOSITS ADJUSTED (All Commercial Banks) 178 24 NEGOTIABLE CD'S -NOT SEAS ADJ, WEDN 20 16 12 8 J 1968 1969 Chart 4 DEMAND DEPOSITS AND CURRENCY SEASONALLY I I ADJUSTED WEEKLY AVERAGES OF DAILY FIGURES IL I I I I I I I l BILLIONS OF DOLLARS ' MONEY SUPPLY COMPONENTS: CURRENCY OUTSIDE BANKS 44 40 DEMAND DEPOSITS 36 150 146 142 138 134 12 U.S. GOVT. DEMAND DEPOSITS (Member Banks) 8 4 J A \V%%y 001* A n j7 0 1968 ^prL 1969 I I i Table 1 MARGINAL RESERVE MEASURES (Dollar amounts in millions, based on period averages of daily figures) Member P d Free reserves Excess reserves Banks Re s e r v e Major banks T Total 8 N.Y. Borrow C t Outside N.Y. in s Country Oter Monthly (reserves weeks ending in): 1968--September October November December - 146 192 255 270 346 267 286 330 492 458 541 600 125 81 65 134 158 88 171 223 73 117 93 66 136 172 212 177 1969--January February March April May June July August September - 477 - 580 - 635 - 844 -1,116 -1,078 -1,045 -1,997 - 776 359 256 202 187 243 277 266 214 260 836 836 837 1,031 1,359 1,355 1,311 1,211 1,026 131 62 58 85 123 57 89 81 83 302 255 233 411 346 459 250 253 236 149 215 254 260 397 288 364 256 222 253 304 293 275 493 550 608 621 485 1969--July 2 9 16 23 30 -1,138 - 891 -1,103 - 972 -1,123 496 129 176 382 146 1,634 1,020 1,279 1,354 1,269 125 -88 86 146 416 165 302 214 152 396 334 390 393 308 697 521 499 661 663 Aug. 6 13 - 251 333 1,090 1,329 18 118 183 365 251 256 638 589 20 -1,162 59 1,221 136 267 194 624 27 - 992 212 1,204 53 196 322 633 3 - 838 402 1,240 57 286 233 664 10 17 24 - 349 886 901 391 132 204 740 1,018 1,105 64 128 83 39 331 306 172 136 328 1 8 p -1,116 - 873 320 91 1,436 964 95 170 531 113 257 267 553 414 15 p 22 p -1,175 - 895 174 120 1,348 1,015 211 -- 397 275 301 344 439 396 Sept. Oct. p - Preliminary. 839 996 1 465 423 388 Table 2 AGGREGATE RESERVES AND MONETARY VARIABLES Retrospective Changes, Seasonally Adjusted (In per cent annual rates based on monthly averages of daily figures) r - R e. s er .. . . ,' . . - e -- - Ae a ..---- Total Reserves Period a _ e-_.. t . s. Nonborrowed Required Reserves Reserves - t a r Mone Variables S u Mo n e y Total Member Bank ur y Currency DepositsTotal p 1y Private Demand Deposits 1 Commercial bank time deposits adjusted .1- 4 + - r -e Credit Proxy (Incl. Eurodollar borrowings) Annua 11 y +10.3 + 7.8 +11.7 + 6.O +10.5 + 7.9 +11.8 + 9.0 + 6.6 + 7.2 1968 1968 1968 1968 + 7.9 + 1.5 +11.5 + 9.6 + 1.1 + 2.1 +15.0 + 5.3 + 7.5 + 1.8 +11.5 + 9.8 + 7.3 + 1.4 +13.6 +12.7 + + + + 1st Quarter 1969 2nd Quarter 1969 3rd Quarter 1969 + 0.1 + 1.2 - 9.3 - 2.8 - 4.7 - 4.8 + 1.7 + 0.2 - 4.8 - 2.2 - 9.4 + 4.1 + 4.5 + 0.2 1968--April May June July August September October November December - 6.9 + 2.5 + 8.8 + 7.6 +22.4 + 4.3 + 8.5 + 7.9 +12.1 -6.9 + 0.9 +12.3 +13.8 +22.4 + 8.3 + 9.2 + 1.3 + 5.3 -5.2 - 0.6 - 5.2 + 2.2 + 7.3 + 9.4 +22.2 + 8.8 +13.3 +11.5 +13.0 + 5.9 +11.0 + 9.0 + 8.9 + 8.9 + 2.5 + 2.5 +11.3 + 7.4 1969--January February + 7.5 - 3.4 - 3.8 - 8.5 +19.9 - 7.6 -22.5 - 5.8 + 0.1 -10.0 + 4.5 +12.7 -4.9 - 3.0 - 4.4 - 5.0 + + + + + + + - 1967 1968 Quarterly 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter -8.6 + 5.5 + 7.4 + 7.0 + 7.1 +15.9 +11.5 +11.7 + 9.8 5.4 8.7 6.8 7.0 + 7.6 + 3.0 +16.5 +17.3 + 7.6 + 3.7 +14.7 +11.9 + 3.4 + 3.9 - 1.0 - 5.1 - 3.0 -13.3 - 1.8 + 1.4 - 6.2 + 5.8 + 8.7 + 8.7 + 5.7 + 8.6 + 8.5 + 2.8 +11.2 + 5.6 + 5.0 +12.5 + 8.3 + 9.8 + 8.9 + 1.6 + 2.4 +11.3 + 7.2 + 3.2 + 3.2 + 2.6 +15.9 +17.0 +16.1 +18.3 +16.2 +16.6 - 4.7 + 6.0 + 9.7 +10.5 +22.5 +10.6 +12.1 +11.6 +11.5 + 2.8 + 8.3 + 8.2 + 2.7 + 8.1 + 8.1 + 5.4 + 8.0 - 2.6 +10.5 + 7.1 + 1.6 + 1.6 +10.2 - 1.6 + 3.1 + 1.6 - 4.7 -10.0 - 4.7 - 0.6 + + 5.5 8.7 6.8 7.1 + + + + Monthly: March April May June July August September October(oroi . p - Preliminary. -8.0 -12.0 + 6.0 - 8.2 -19.3 - 2.9 + 7.9 -14.5 +11.3 + 9.4 +22.3 + 2.6 +10.4 + 8.4 +10.2 +14.3 - 8.6 -17.6 - 7.6 - 0.8 - 7.5 - 3.2 - 1.2 -10.1 + 4.9 - 1.2 -10.2 -18.9 -11.3 + 1.7 - 8.0 6.2 3.1 3.1 7.9 1.2 4.2 1.8 1.2 + 2.5 + 1.0 - 3.6 - 5.4 -18.5 -19.4 - 2.5 - 3.5 0.8 2.0 6.7 5.5 - 1.2 -11.4 - 9.5 +2.4 - 8.0 Table 3 AGGREGATERESERVES AND MONETARY VARIABLES Seasonally Adjusted (Based S R , figures) Member Bank Deposits Supported by Req uired Reserves _ Tol PI iate I .S. Gov't I. Ink demand demand To a deposits P S t [deposits 1/1 deposits (I n b i 1 i o n s e __________ Period on monthly averages of daily PeriodTotal Nonborod Rued rESves rereserves ItSie Ireserves rdeposits ) (In millions of dll Money Supply Total |ed o f d o Currency 2/ 2/ 1a r 1 Credit Comnercial Proxy bank time Private deposits (Incl. Euro demand adjusted dollar e borrow1ngs deposits 3 4/ borrowings Monthly1968--January February March April May June July August September October November December 26,134 26,352 26.451 26,298 26.353 26.547 26.715 27,213 27,311 27,504 27,685 27,964 25,818 25,961 25,755 25,606 25,626 25,889 26,186 26,675 26,860 27,066 27,095 27,215 i 25,774 1 25,989 26,078 25,964 25,952 26,196 26,402 26,893 26,951 27,185 27,376 27,609 275.1 277.4 278.5 277.3 277.8 279.5 281.7 286.9 289.0 292.2 295.0 298.2 149.9 150.2 151.2 151.3 151.5 151.8 153.8 156.5 158.9 161.5 163.5 165.8 119.7 120.1 120.6 120.8 122.7 123.8 125.2 125.6 124.8 125.7 126.8 128.2 5.4 7.1 6.7 5.2 3.7 3.9 2.7 4.8 5.3 5.0 4.7 4.2 182.6 183.3 184.2 185.1 186.8 188.2 189.6 191.0 191.4 191.8 193.6 194.8 40.6 40.7 41.1 41.3 41.6 41.9 42 1 42 4 42.7 42.8 43.2 43.4 142.0 142.6 143.2 143.8 145.3 146.3 147.5 148.6 148.8 149.1 150.5 151.4 184.1 185.8 187.2 187.7 188.2 188.6 191.1 193.8 196.4 199.4 202.1 204.9 279.4 281.9 283.2 282.1 283.5 285.8 288.3 293.7 296.3 299.3 302.2 305.1 1969--January February March April May June July August September 0 tober p 28,139 28,060 27,972 27,775 28,235 28,056 27,530 27,398 27.L01 ?7,386 27,318 27,206 27,024 26,754 26,888 26,705 26 275 i26,211 26,383 26,"7 27,902 27,832 27,729 27,614 27,942 27,742 27,334 27,161 27,144 27.192 297.0 296.7 294.2 295.4 295.1 292.6 288.0 285.3 28).7 283.8 163.2 161.0 160.5 160.1 159.3 158.1 155.1 152.5 152.1 151.5 128.4 129.1 128.9 129.4 130.0 130.5 130.5 129.9 129.2 129.1 5.4 6.7 4.8 5.9 5.9 4.0 2.4 2.9 4.4 3.1 195.8 196.3 196.8 198.1 198.3 199.0 199.3 199.1 199.1 199.5 43.5 43.8 44.1 44.2 44.5 44.8 45.0 45.3 45.2 45.6 152.3 152.5 152.7 154.0 153.8 154.2 154.4 153.8 153.8 153.9 203.2 202.4 202.3 202.3 201.7 200.8 197.7 194.5 194.1 191.5 304.8 305.3 303.6 305.0 305.0 304.7 301 8 299.4 300.0 . .79A ' Private __ _ _ , - _ _ _ , demand deposits include demand deposits of individuals, partnerships, and corporations and net interbank deposits. Includes currency outside the Treasury, the Federal Reserve, and the vaults of all commercial banks. Includes (1) demand deposits at all commercial banks, other than those due to domestic commercial banks and the U.S. Government, and (2) foreign demand balances at Federal Reserve Banks. process of collection and Federal Reserve float; Excludes interbank and U.S. Government time deposits less cash items in AGGREGATE RESERVES AND MONETARY VARIABLES _ Todl Pe iod ' Rmt ih , Anl Nonbo i... l reserves _______ _ st.pp.o l,,, ui II d Se '" I .. ___________i 'i Ilink De,,i , 9 i d ,cl T me ' I ' posI 1 s , iv' posits 1 1 8 15 22 29 28,359 28.041 28,290 28 223 28,009 27.4 19 27,333 27.552 27,416 26,998 Feb. 5 12 19 26 27,999 27,929 27,986 28,246 27,170 27,180 26,917 27,490 27,740 27,748 27,748 28,017 295.8 297.4 297.4 296.3 161.4 161.1 160.8 160.6 128.0 128.2 129.8 Mar. 5 12 19 26 28,285 28,034 27,781 27,401 27,109 27,000 26,931 28,003 27,734 27,686 27,684 295.5 295.7 294.1 293.2 160.4 160.6 160.5 160.7 2 9 16 23 30 27,879 27,611 27,590 27,848 28,023 26,689 26,838 26,733 26,830 27,570 27,431 27,515 27,698 27,823 293.6 294.9 295.6 295.9 294.7 May 7 14 21 28 28,501 28,162 28,020 28,219 27,048 26,980 26,629 26,920 27,993 27,888 27,844 28,091 June 4 11 18 25 28,320 28,308 27 833 27.761 26,829 27,028 26,543 26,588 July 2 9 16 23 30 28,217 27,506 27,568 27.703 27.151 Aug. 6 13 20 27 Sept. Oct. 1969-- an. Apr. - s . .(it. IdepositsL/ I n s ) 27.883 27,799 28,065 28 010 27,781 (In millions Weeklvy 01 dolil .d l c 1 I ' G ' < I mI nd deposits I o n s Private lot Currency 2/ d o 1 I .i r s al o Credit Proxy Commercial bank time Money Supply v deposits adjusted demand deposits 31 4/ (Incl. Eur dollar borrowings 5.6 6.9 195.3 196.8 196.1 196.0 194.2 43.4 43.5 43.6 43.6 43.6 151.9 153.3 152.5 152.4 150.6 205.2 203.9 203.5 202.9 202.9 305.6 305.6 299.8 304.6 304.3 1'9.' 6.5 8.0 6.8 5.7 195.3 19 .6 197.1 196.8 43.7 43.8 43.8 43.8 151.6 151.8 153.2 153.0 202.2 202.2 202.6 202.6 304.3 306.0 305.9 305.1 129.5 128.6 128.5 129.0 5.6 6.5 5.1 3.6 196.4 196.4 196.8 196.9 43.9 152.5 152.5 152.8 152.7 202.4 202.3 202.3 202.3 304.4 305.0 303.6 302.8 160.7 160.6 160.2 160.1 159.8 130.0 129.5 130.0 129.1 128.3 3.0 4.9 5.3 6.8 6.6 197.6 199.0 198.7 197.4 196.9 44.2 44.2 44.2 44.2 44.2 153.4 154.7 154.5 153.2 152.7 202.6 202.6 202.4 202.3 202.0 303.0 304.2 305.1 305.7 304.7 294.7 296.5 295.2 294.9 159.6 159.4 159.3 159.1 128.7 129.8 131.0 130.6 6.4 7.3 5.0 5.3 197.2 197.8 199.5 199.1 44.3 44.4 44.4 44.6 152.9 153.4 155.1 154.6 202.0 201.8 201.7 201.7 304.5 306.2 305.0 305.1 27,826 27,800 27,698 27,701 293.7 293.9 293.1 291.3 158.8 158.7 158.2 157.6 130.6 130.6 130.6 130.3 4.3 4.6 4.3 3.4 198.8 198.8 198.2 199.1 44.7 44.7 44.8 44.8 154.0 154.0 153.5 154.2 201.6 201.5 200.9 200.1 303.6 304.9 305.6 304.5 26,543 26.461 26,370 26,274 25,927 27,711 27,662 27,492 27,307 26,980 290.6 289.4 286.7 288.0 287.1 157.0 151.1 155. J 154. 6 154. 1 130.7 1 30.2 1 0. 5 130.5 130.0 2.9 3.0 .9 3.0 3.0 199.2 199.4 199.3 199.1 199.1 44.9 44.9 45.0 45.0 45.0 154.4 154.5 154.3 154.2 154.1 199.3 198.8 197.9 197.2 196.7 303.8 302.5 300.7 302.2 301.3 27,491 27,538 27,151 27,433 26,411 26,309 25,915 26,259 27,258 27,216 27,164 27,135 286.2 285.9 284.4 285.1 153.4 152.9 152.4 152.1 129.9 129.9 130.3 129.9 2.9 3.1 1.7 3.1 199.1 199.1 199.5 198.9 45.1 45.2 45.2 45.3 153.9 154.0 154.3 153.7 195.6 194.9 194.4 193.9 300.2 299.8 298.6 299.4 3 10 17 24 27,409 27,325 27,370 27,236 26,194 26,687 26,364 26,199 26,957 27,059 27,238 26,982 285.8 283.7 287.1 285.0 151.9 151.9 152.0 152.2 130.7 129.7 129.8 128.6 3.2 2.2 5.2 4.1 199.5 199.3 199.6 198.3 45.5 45.1 45.3 45.3 154.0 154.2 154.3 153.0 194.0 193.9 194.2 194.0 300.0 298.1 301.6 299.2 1 8 15 22 27,717 27,185 27,215 27,.46 26,362 26,246 25,929 76,519 27,417 27,044 27,059 27,300 284.2 283.8 282.1 284.8 152.3 152.0 151.6 151.4 128.1 128.9 127.9 130.4 3.8 3.0 2.7 3.0 198.3 199.7 198.7 200.4 45.2 45.3 153.1 154.3 153.1 154.6 194.3 193.9 193.8 193.3 298.2 297.7 296.3 299.1 27,942 26,634 _______ 298.8 298.9 296.7 296.3 295.7 i 165.5 164.4 163.9 162.8 162.1 129.3 129.9 128.5 127.9 126.8 4.1 4.6 _ _ _ _ 4.1 _L_____ Private demand deposits include demand deposits of individuals, partnerships, and corporations and net Includes currency outside the Treasury, the Federal Reserve, and the vaults of all commercial banks. 44.0 44.1 44.2 45.6 45.7 I interbank deposits. Includes (1) demand deposits at all commercial banks, other than those due to domestic commercial banks and the U.S. process of collection and federal Reserve float; and (2) foreign demand balances at Federal Reserve Banks. U.S. Government time deposits. Excludes interbank and Government, I _ less cash items in Table 5 Sol RCE OF FEDERAL RESERVr (REDIT (D0 liar Period Total rederal ' Reserve tredit (Excl. float) amlount .S. in mi llinn Retrospective C.anges of dollars, haoedl on weekly averages GCvcrnment securitie, Bills 1/ figur-s) Federal Ttal iolldings of daily Other Repurclase agreements Agency Securities Bankers' acceptances Member banks borrowings Year: 1967 (12/28/66 - 12/27/67) 1968 (12/27/67 - 12/26/68) +4,718 +3,757 +4,433 ( +2,143 ( --- 103 146* 143* 319* 284 + + 51 57 -- ) + 559 + 819 280 + + + + 41 66 190 243 -- -- +5,009 +3,298 +1,153 +1,176 - 577 S 21 19 3 - 203 + 514 .-- y: )--Apr. May June July Aug. Sept. 2 9 16 23 30 + 357 - 113 380 + + 773 347 7 14 21 28 + 794 - 293 + + 149 259 345 118 39 307 4 11 18 25 + 439 - 35 18 168 308 256 33 174 + + + - 351 284 118 174 2 9 16 23 30 + 679 - 247 + 261 + + + 180 332 122 - 337 379 297 401 30 408 287 - 404 264 189) 121) 121) 146) 95) 6 13 20 27 + + - 562 153 198 + + 86 672 69 45 96 241 S 71 + 355 + 61 241) 98) 10) 37) 3 10 17 24 + 273 -1,434 218 686' 633* + 155 -1,276 -890 +1,254 51) 632) 531) 101) 296 217 548 33 + + + + 400 728 1 + 622 8 Oct. - + - 154 + 899 - 384 p 15 p 22 v 87 88 536 172 + + + + + + 73 71) 309) 191) + 67 117 + 431 2 400 52 256 32 + - 11 3 - 8 - 14 - 37 - 10 11 - 2 18 - 5 - 13 + 21 35 + - 18 3 63 131 + + 5 12 4 50 + + 2 40 211 129 -+ - 13 2 34 58 24 + 4 + - 2 - 92 - 4 - 23 + - 96 ) 116 28 151 + 27 + - + - + - 304 + 156) ) 4 + + - + ) -) -) -) 430) 223 - 156) -- 52 7 211 + - 7) 533) 460) 80) 12 205 _° + + 4 33 1 - 19 1/ Figures in parenthesis reflect reserve effect of match sale-purchase agreement. * - Includes effect of changes in special certificates of $+96 million of the week of April 9, $+627 million of the week of April 16, $-723 million of the week of April 23 , $+507 million of the week of September 10, $+154 million of the week of September 17, and $-661 million of the week of September 24. p - Preliminary. MAJOR SOURCES AND USES OF RESERVES and Prospective Changes (Dollar amounts in billions, based on weekly averages of daily figures) I . i r r - i I I t s r 11 s u1 L I 1 e e r v e s eIncv Other nonmember roreign 1 I.01 ( TreJaurv n b out deposits and deposits ' Fllt lpcr.itions I banks I I and gold loans F.R. accounts _= I S 1' I 1 g n 1 1 t o n r e s ( r Ve ; ) Retrospective I Y'*l '' P( r I od I cr Sr IIi III l .. _. 1 ( Ilo it) Year 1967 (12/28/66-12/27/67) 1968 (12/27/67-12/25/68) Weekly: 569 -- April . 1\ I 11 I < +4,718 - +1,757 -2,,Ob7 2 9 16 23 30 7 14 21 28 4 11 18 25 2 9 16 23 30 928 7 67 +1,309 + July -389 85 + + June -2,305 -3,221 725 + + May Aug. - + + + Nov. Excess reserves +1,517 + +1,563 - 55 80 + 41 + 316 869 +1,522 +1,508 60 98 - 84 81 18 3 7 19 + 48 48 - 9 14 + + + + 6 + + 30 10 8 - 4 + 3 10 17 + 4 - 27 - 2 11 + + + - 11 11 18 1 - -l 1 8 P 15 P 22 p 1969--Oct. Required reserves reserves I I1 I 40 32 S 4 8 + + + = Bank use of reserves + + + roervea 25 S 15 + 29 + 5 + 2 24 (h t. Change in total + + + 13 20 27 Sept. = e + 4 3/ PROJECTED 2, 29 - 140 -- + 430 - 55 - 575 -- 5 12 19 26 + + - 520 45 465 230 ----- 130 -280 515 110 - 20 + + + 200 200 400 135 ----- ---- 9 - 30 - 370 - 35 65 + + - 170 90 285 205 + 170 90 + 285 -205 -+ -- 1/ For retrospective details, see Table 5. 2/ See reverse side for explanation. 3/ Includes $415 million increase in required reserves due to changes in Regulations M and D, effective October 16, 1969. p - Preliminary. 370 5 Explanation of Projections in Table 6 1. Changes in Federal Reserve credit indicate reserves needed to offset projected changes in required reserves and factors affecting the supply of reserves. 2. Projected changes in currency outside banks reflect seasonal movements plus an allowance for growth of about $50 million per week. 3. Projected effects of Treasury operations, included in "technical factors," reflect scheduled and assumed calls in current two weeks and maintenance of Treasury balances with Federal Reserve at $1.0 billion, thereafter. 4. Projected changes in required reserves assume the existing net reserve position of banks and the structure of interest rates in the market, as well as the current economic outlook. On the basis of these assumptions, projections reflect expected movements in bank credit and money in the period ahead, including the effects of such elements as the public's loan demand, repayments of previous loans, banks' investment preferences and willingness to supply loans, banks' desires and abilities to obtain time and savings deposits, and the Government's financing needs. The projections thus encompass normal seasonal developments, temporary bursts of loans demand and expected associated repayments not currently reflected by the seasonals, and whatever cyclical and growth demands for money and credit are expected in the projection period. Assumed Treasury financing operations include: $3.0 billion, October 29; $1.5 billion, December 3; and $100 million addition to weekly auctions beginning November 6 over the remainder of the year.
@FedFRASER