NEW YORK — The nation's basic money supply spurted $6.7 billion in mid-December, the Federal Reserve Board said Friday, a somewhat larger-than-expected increase but one that still left M1 in the middle of the Fed's annual target range.
The bond market retreated sharply after the report was released but later recovered most of its lost ground.
"It's really not such a big deal," said Maury Harris, an economist with the investment firm of Paine Webber Inc.
The Fed said M1 rose to a seasonally adjusted $557.6 billion in the week ended Dec. 24 from $550.9 billion the previous week. M1 includes cash in circulation, deposits in checking accounts and non-bank travelers checks.
For the latest 13 weeks, M1 averaged $548.8 billion, a 1.4% seasonally adjusted annual rate of gain from the previous 13 weeks.
"The money supply was up more than people expected," Harris said, adding that analysts had been predicting an increase of $4 billion to $5 billion.