NEW YORK — The nation's basic money supply rose $3.7 billion in mid-February, the Federal Reserve Board reported Thursday.
The Fed said M1 rose to a seasonally adjusted $634 billion in the week ended Feb. 24 from a revised $630.3 billion in the previous week. Last week's figure was originally reported by the Fed as $630.6 billion.
M1 includes cash in circulation, deposits in checking accounts and non-bank travelers checks.
There was little reaction to the Fed's report in the credit markets, although the gain was larger than the $2.2-billion increase that had been expected and leaves the measure $400 million over the Fed's growth target, said Maury Harris, chief economist for Paine Webber.
For the latest 13 weeks, M1 averaged $627.8 billion, an 8.9% seasonally adjusted annual rate of gain from the previous 13 weeks.
The Fed, in its attempt to provide enough money to stimulate non-inflationary economic growth, has said it would like to see M1 grow in a range of 3% to 8% from the fourth quarter of 1985 through the final quarter of 1986.
"Not too many people are paying attention. This is because the Fed has told us it pays more attention to M2 and M3, and M2 and M3 are growing very moderately," Harris said. "So M1 being a little bit over the target range really isn't much of a cause for concern."
M2 is made up of M1 and such accounts as savings deposits and money-market mutual funds. M3 is the sum of M2 plus less-liquid accounts such as certificates of deposit in minimum denominations of $100,000.
The Fed has said it would like growth of 6% to 9% for M2 and 6% to 9.5% for M3.
The central bank of West Germany announced that it was reducing its discount rate half a percentage point to 3.5%. Analysts said the move enhanced the chances that the Fed will cut the U.S. discount rate--what financial institutions are charged when they borrow funds from the central bank.
In other reports:
- The Federal Reserve Bank of New York reported that commercial and industrial loans at major New York City banks rose $431 million in the week ended Feb. 26, compared to a gain of $69 million a week earlier, bringing the total to $57.829 billion.
- The Federal Reserve said bank borrowings from the Federal Reserve System averaged $184 million in the week ended Wednesday, down from $556 million in the previous week.
- 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 $239.4 billion in the week ended Wednesday, up from $237.7 billion a week earlier.