f=trs/x\ /vc//» l. Week ending: May 13, 1981 Both the discount rate and the prime rate have increased in recent weeks. The discount rate - - the interest rate the Federal Reserve charges depository institutions for borrowing - - was increased from 13 percent to 14 percent on May 5. In addition, the 3 percent surcharge applicable to large, frequent borrowers was increased to 4 percent. These actions were taken in light of the currently high levels of short-term market interest rates and the need to maintain restraint in monetary aggregate growth. The increase in the discount rate comes in the face of relatively large borrowings from Federal Reserve Banks (see page 11). Allowing the discount rate to remain substantially below other market rates would have further encouraged borrowing from Federal Reserve Banks, providing support for undesired monetary aggregate growth. The prime lending rate at most large commercial banks - - the interest rate these banks charge their corporate borrowers with the highest credit rating - - was raised to 19.50 percent on May 11. This rate is now 250 basis points above the most recent trough in the prime rate , which occurred in the latter part of March. The recent prime rate increases reflect the interaction of two factors. One is the strengthening of business credit demand, which is reflected in the recent increase in commercial and industrial loans at weekly reporting large commercial banks. For example, from the four weeks ending March 25 to the four weeks ending May 6, business loans at large commercial banks increased at a 19.6 percent annual rate, after sharply declining at a 13.5 percent rate in the previous seven weeks. The second factor contributing to the recent increases in the prime rate is the rising cost to banks of acquiring additional loanable funds. Because large negotiable certificates of deposit (CDs) represent an important source of such funds, increases in the cost of such deposits are soon reflected in increases in the prime rate. Since the week ending March 27, the 90-day CD rate has risen almost 500 basis points, a rise similar to the yield on other short-term securities. Prepared by Federal Reserve Bank of St. Louis Released: May 15, 1981 Digitized for FRASER http://fraser.stlouisfed.org Federal Reserve Bank of St. Louis
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U.S. Financial Data: Week Ending: May 13, 1981 · 13/05/1981 · billions of dollars adjusted bank reserves 1/ averages of daily figures seasonally adjusted billions of dollars 50
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f=trs/x\ /vc//» l.
Week ending: May 13, 1981
Both the discount rate and the prime rate have increased in recent weeks. The discount rate - - the interest rate the Federal Reserve charges depository institutions for borrowing - - was increased from 13 percent to 14 percent on May 5. In addition, the 3 percent surcharge applicable to large, frequent borrowers was increased to 4 percent. These actions were taken in light of the currently high levels of short-term market interest rates and the need to maintain restraint in monetary aggregate growth. The increase in the discount rate comes in the face of relatively large borrowings from Federal Reserve Banks (see page 11). Allowing the discount rate to remain substantially below other market rates would have further encouraged borrowing from Federal Reserve Banks, providing support for undesired monetary aggregate growth.
The prime lending rate at most large commercial banks - - the interest rate these banks charge their corporate borrowers with the highest credit rating - - was raised to 19.50 percent on May 11. This rate is now 250 basis points above the most recent trough in the prime rate , which occurred in the latter part of March.
The recent prime rate increases reflect the interaction of two factors. One is the strengthening of business credit demand, which is reflected in the recent increase in commercial and industrial loans at weekly reporting large commercial banks. For example, from the four weeks ending March 25 to the four weeks ending May 6, business loans at large commercial banks increased at a 19.6 percent annual rate, after sharply declining at a 13.5 percent rate in the previous seven weeks.
The second factor contributing to the recent increases in the prime rate is the rising cost to banks of acquiring additional loanable funds. Because large negotiable certificates of deposit (CDs) represent an important source of such funds, increases in the cost of such deposits are soon reflected in increases in the prime rate. Since the week ending March 27, the 90-day CD rate has risen almost 500 basis points, a rise similar to the yield on other short-term securities.
Prepared by Federal Reserve Bank of St. Louis
Released: May 15, 1981
Digitized for FRASER http://fraser.stlouisfed.org Federal Reserve Bank of St. Louis
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ADJUSTED MONETARY BASEAVERAGES OF DAILY FIGURESSEASONALLY ADJUSTED BY THIS BANKBILLIONS OF DOLLARS
170 ---------- ,------------- .------BILLIONS OF DOLLARS ------------------- ---------- 170
9 IIIIQN$APR. 164.6
165.2165.4166.0166.2166.0
5 19 2 16 30 14 28 11 25 9 23 6 20 3 17MAR APR MAY JUN JUL AUG 1980
SEP OCT NOV DEC JAN FEB MAR1981
LATEST DATA PLOTTED WEEK ENDING: MAY 13. 1981
THE ADJUSTEO MONETARY BASE CONSISTS OF: ( I ) MEMBER BANK RESERVES AT THE FEOERAL RESERVE BANKS, (2) CURRENCY IN CIRCULATION (CURRENCY HELD BY THE PUBLIC AND IN THE VAULTS OF COMMERCIAL BANKS), AND (3) AN ADJUSTMENT FOR RESERVE REQUIREMENT RATIO CHANGES. THE MAJOR SOURCE OF THE ADJUSTED MONETARY BASE IS FEDERAL RESERVE CREDIT. DATA ARE COMPUTED BY THIS BANK. A DETAILED DESCRIPTION OF THE ADJUSTED MONETARY BASE IS AVAILABLE FROM THIS BANK.
ADJUSTED MONETARY BASE
COMPOUNDED ANNUAL RATES OF CHANGE , AVERAGE OF FOUR WEEKS ENDING:
5/14/80 8/13/80 10/15/80 11/12/80 1 2/10/80 1/14/81 2/11/81 3/11/81TO THE AVERAGE OF FOUR WEEKS ENDING:
Digitized for FRASER http://fraser.stlouisfed.org Federal Reserve Bank of St. Louis
I
4
MONEY STOCK ( Ml A)AVERAGES OF DAILY FIGURES
BILLIONS OF DOLLARS SEASONALLY ADJUSTED BILLIONS OF DOLLARS
BILLIONS__ APR. 365.6
366. 1363.4365.8363.3366.8— MAY
5 19 2 16 30 14 28 11 25 9 23 6 20 3 17JAN FEB MARMAY JUN
1980LATEST DATA PLOTTED WEEK ENDING: MAY 6, 1981
CURRENT DATA APPEAR IN THE BOARD OF GOVERNORS' H.6 RELEASE.
MIA CONSISTS OF CURRENCY AND COIN PLUS COMMERCIAL BANK DEMAND DEPOSITS HELD BY THE NONBANK PUBLIC EXCLUDING THOSE HELD BY FOREIGN BANKS AND OFFICIAL INSTITUTIONS.
MONEY STOCK (MIA)
COMPOUNDED ANNUAL RATES OF CHANGE, AVERAGE OF FOUR WEEKS ENDING:
* AVERAGES OF RATES AVAILABLE.** BOND BUYER'S AVERAGE INDEX OF 20 MUNICIPAL BONDS, THURSDAY DATA. XXX DATA ARE 4-MONTH C0lyl4ERCIAL PAPER RATES.N.A. - NOT AVAILABLE
PREPARED BY FEDERAL RESERVE BANK OF ST. LOUIS
Digitized for FRASER http://fraser.stlouisfed.org Federal Reserve Bank of St. Louis
SELECTED INTEREST RATESAVERAGES OF DAILY RATES ENDED FRIDAY
21.0
FEDERAL FUNDS RATE20.0
19.0
18.0
17.0
16.0
13.0 5-YEARTREASURY SECURITIES
11.0 DISCOUNT RATE
10.0
3-MONTH TREASURY BILL
3 17 31 14 28 12 26 9 232 16 30 13 27 II 25 8 22 5 19NOV DEC
PERCENT21.0
20.0
19.0
18.0
17.0
16.0
15.0
14.0
13.0
12.0
I 1 .0
10.0
9.0
8.0
7.0
0
LATEST DATA PLOTTED ARE AVERAGES OF RATES AVAILABLE FOR THE WEEK ENDING: MAY 15, 1981
X AVERAGES OF RATES AVAILABLE. „ .........X* SEVEN-DAY AVERAGES FOR WEEK ENDING WEDNESDAY TWO DAYS EARLIER THAN DATE SHOWN.
CURRENT DATA APPEAR IN THE BOARD OF GOVERNORS* H.9 RELEASE.RATESMDN'LONG-TERM TREASURY SECURITIES ARE COMPUTED BY THE FEDERAL RESERVE BANK OF ST. LOUIS.
TREASURY BILL YIELDS ON DISCOUNT BASIS.PREPARED BY FEDERAL RESERVE BANK OF ST. LOUIS
7
Digitized for FRASER http://fraser.stlouisfed.org Federal Reserve Bank of St. Louis
8
MULTIPLIERS!/CURRENCY OF MONEY STOCK MEASURES 2/
AVERAGES OF DAILY FIGURES ratio SEASONALLY ADJUSTED
MIA1981 RATIO
APR. 2.217 MONEY MULTIPLIERS2.224
2i 189_ MAY 2:207
RATIOAPR.
I I I I I I I I I I I I I I I I
LATEST DATA PLOTTED WEEK ENDING: MAY 6, 1981
BILLIONS OF DOLLARS 122
5
MAR19 16 SO 14 28 II 25
APR MAY JUN
BILLIONS OF DOLLARS 1221 1 1
- COMPOUNDED ANNUAL R OF CHANGE, AVERAGE
---- THE FOUR WEEKS END 1MAY 6, 1981 FROM
- THE FOUR WEEKS END 1—MAR. 4, 1981 9.
FEB. 4, 1981 8.- JAN. 7, 1981 7.
DEC. 3, 1980 7.
rATES
OF-
4G: ' -
CURRE NCY-
AU - MA
g. 6;Y 7,
19801980
7: 9. -
- / -
-1981 BILLIO
APR . 1 18.48 18.5 _
IS 18.622 19.4 _29 19.36 19.5 _
1,1 1.1.1 1 1 1 1 II Lrn i
1 1 1 1 1 1 i i 1 1 1 1 II _LLL -LLL -LLL l.l 1.1, -LLL.
MAY
JJjJ9 23 6 20 3 17 1 15 29 12 2C 10 24
OCT NOV DECSEPJUL AUG 1980
LATEST DATA PLOTTED WEEK ENDING: MAY 6. 1981
1/ RATIO OF MONEY STOCK (MIA) OR (MlB ) TO ADJUSTED MONETARY BASE
2/ CURRENT DATA APPEAR IN THE BOARD OF GOVERNORS’ H.6 RELEASE.
7 21
JAN4 18
FIB4 18
MAR 1981
1 IS 29 13 27
APR MAY
PREPARED BY FEDERAL RESERVE BANK OF ST. LOUIS
Digitized for FRASER http://fraser.stlouisfed.org Federal Reserve Bank of St. Louis
DEMAND DEPOSIT COMPONENT OF MONEY STOCK (MIA)AVERAGES OF DAILY FIGURES
SEASONALLY ADJUSTED BILLIONS OF DOLLARS ------------------------------- 280
BILLIONS OF DOLLARS 280 --------- ,------------ 1-----
8ILLI0NS247.2__ APR.247.6
246.4244.0247.3— MAY
I I I II I I I1 15 29 12 26 10 24 7 21
MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY 1980 1981
LATEST DATA PLOTTED WEEK ENDING: MAY 6, 1981
CURRENT DATA APPEAR IN THE BOARD OF GOVERNORS’ H.6 RELEASE.
DEMAND DEPOSIT COMPONENT OF MONEY STOCK ( MIA )
COMPOUNDED ANNUAL RATES OF CHANGE, AVERAGE OF FOUR WEEKS ENDING:
5/7/80 8/6/80 10/8/80 11/5/80 12/3/80 1/7/81 2/4/81 3/4/81TO THE AVERAGE OF FOUR WEEKS ENDING: