NEW YORK — The nation's basic money supply jumped $2.8 billion in late March, the Federal Reserve Board reported Thursday. The increase broke a string of three consecutive weekly declines but had been widely anticipated.
"It was well anticipated," said Raymond Stone, a financial economist at Merrill Lynch Capital Markets. "If it is a precursor to other numbers on down the line, we will have some difficulty, but, at this point, it appears it just reverses some of the weak numbers we have seen in recent weeks."
Other analysts agreed that the report was unlikely to prompt any change in the Fed's policy, which is designed to assure steady economic growth without a resurgence in inflation.
The Fed said M1 rose to a seasonally adjusted $572.8 billion in the week ended March 25 from $570 billion in the previous week. M1 includes cash in circulation, deposits in checking accounts and non-bank travelers checks.
For the latest 13 weeks, M1 averaged $567.1 billion, a 10.5% seasonally adjusted annual rate of gain from the previous 13 weeks.
The Fed has said it would like to see M1 grow between 4% and 7% from the fourth quarter of 1984 through the fourth quarter of 1985.
Money Market Services of Belmont, Calif., said its survey of more than 40 analysts in advance of the report had shown that most expected a rise of about $2.5 billion.
Other indicators included:
- The Federal Reserve Bank of New York reported that commercial and industrial loans at major New York City banks fell $410 million in the week ended March 27, compared to a gain of $451 million a week earlier.
- Member bank borrowings from the Federal Reserve System averaged $450 million for the two weeks ended March 27, down from $641 million in the previous two-week period. Borrowings from the Fed averaged $386 million in the week ended Wednesday, up from $382 million in the previous week.
- Total reserves of member banks averaged a seasonally adjusted $40.653 billion in the two-week period, up from $40.556 billion in the previous two-week period.
- The banking system averaged free reserves of $358 million in the two weeks ended March 27, compared to free reserves of $141 million for the previous two-week period.
- The Federal Reserve Bank of St. Louis reported that the monetary base, the seasonally adjusted total of member bank reserves held at Federal Reserve banks and cash in bank vaults and in circulation, was $223.7 billion, down from $220.4 billion a week earlier.