Money Supply Drops $300 Million

The nation’s basic money supply dipped $300 million in mid-April, the Federal Reserve Board said Thursday, but the measure remained above growth targets.

Analysts were divided on whether the report provided evidence that the Fed had moved recently to accommodate lower interest rates. But they agreed that a further shift in credit policy was unlikely until clear evidence appeared on the course of the economy.

“It’s likely the Fed will not rock the boat in this situation,” said David Jones, an economist at the government securities firm Aubrey G. Lanston & Co.

The Fed said the basic money supply, known as M1 and representing funds readily available for spending, fell to a seasonally adjusted $573.6 billion in the week ended April 15 from $573.9 billion in the previous week.

For the latest 13 weeks, M1 averaged $570 billion, a 10.4% 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.

The drop in the money supply ran counter to earlier estimates by analysts of a $1-billion rise, something that normally would lead to a rally in bond markets on the grounds that there would be less pressure on the Fed to adopt a more restrictive policy that could push interest rates higher.

But even as the money supply figures were released, analysts were worrying about projections of a multibillion-dollar rise in M1 for the following week, based on preliminary private surveys of deposit flows at financial institutions.