NEW YORK — The nation's basic money supply shot up $5.3 billion in mid-December, the Federal Reserve Board reported Friday. The increase exceeded analysts' expectations but produced no reaction in the credit markets.
The Fed said M1 rose to a seasonally adjusted $627.9 billion in the week ended Dec. 23 from $622.6 billion in the previous week. M1 represents money readily available for spending and includes cash in circulation, deposits in checking accounts and non-bank travelers checks.
For the latest 13 weeks, M1 averaged $617.1 billion, a 9.4% seasonally adjusted annual rate of gain from the previous 13 weeks. The Fed said it wanted to see M1 grow between 3% and 8% in the second half of 1985. The money supply has been growing far faster than the Fed's target, but the Fed has not taken any action to rein it in, something that could push interest rates higher.
Analysts say the Fed has paid less attention to its monetary targets lately and has focused more on ensuring steady economic growth.