Money Supply Expands $2.7 Billion

The nation’s basic money supply rose $2.7 billion in mid-April, the Federal Reserve Board reported Thursday.

The increase, which economists attributed to a spurt in tax refunds, had been expected and caused little reaction in the credit markets.

Although the multibillion-dollar jump left the money supply above the Fed’s upper growth target, the economists said they expected the Fed to hold a steady policy course.

The Fed said the basic money supply, known as M1, rose to a seasonally adjusted $576.2 billion in the week ended April 22 from $573.5 billion in the previous week. M1 includes cash in circulation, deposits in checking accounts and non-bank travelers checks.

“This was in line with what was expected. As a result, there was no impact on the marketplace,” said Maury Harris, an economist at the investment firm Paine Webber.

The consensus had been that M1 would increase $2.5 billion in the latest week.

“One possible explanation is tax refunds. Tax refunds have been paid out faster than usual in April, and, when the money goes from the government back to individuals, the money is returning into the measure of the money supply,” Harris said.

Earlier, computer problems at the Internal Revenue Service had caused delays in tax refunds.

The latest money supply increase left the measure $6.3 billion above the Fed’s upper growth target.

For the latest 13 weeks, M1 averaged $570.9 billion, a 10.1% seasonally adjusted annual rate of gain from the previous 13 weeks.