NEW YORK — The nation's basic money supply mushroomed by $7.7 billion in early October, the Federal Reserve Board reported Thursday.
The report had little impact in the credit markets, however, where bond prices already were lower for the day. Economists say the Fed is more concerned about slow economic growth than it is about rapid money growth.
On top of that, analysts surveyed in advance of the late afternoon report had been expecting a huge gain in the money gauge known as M1, which measures funds that can be spent readily such as cash and deposits in checking accounts.
Two broader barometers of the money supply, which are reported only once a month, also rose, the central bank said.
The Fed said its M1 measure of the money supply rose to a seasonally adjusted average of $701.3 billion in the week ended Oct. 6 from $693.6 billion in the previous week.
For the latest 13 weeks, M1 averaged $687.6 billion, a 17.1% seasonally adjusted annual rate of gain from the previous 13 weeks.
Well Above Fed Target
The latest increase left M1 well ahead of the growth targets that the Fed has established in its attempt to provide enough money to stimulate non-inflationary economic growth. The Fed 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.
The Fed reported that its M2 money measure, which includes M1 and such accounts as savings deposits and money-market mutual funds, rose $16.8 billion to an average of $2.7406 trillion in September, up from $2.7238 trillion in August. The latest figures leave M2 slightly below the Fed's upper growth target of 9%.
The Fed reported that M3, which is the sum of M2 plus less-liquid accounts, such as certificates of deposit in minimum denominations of $100,000, rose $24.8 billion to $3.43 trillion in September, compared to $3.40 trillion in August. That leaves M3 slightly above the Fed's upper growth target of 9.5%.