Basic Money Supply Rises Only $200 Million in Week

The nation’s basic money supply, known as M1, rose $200 million in early November, the Federal Reserve Board reported Thursday.

The Fed said M1 increased to a seasonally adjusted $611.6 billion in the week ended Nov. 4 from $611.4 billion in the previous week.

M1 represents funds readily available for spending and includes cash in circulation, deposits in checking accounts and non-bank travelers checks.

Despite the relatively modest increase reported Thursday--analysts had been projecting a rise of about $1 billion--the money supply remained far above the upper limits of the targets set by the Fed to encourage non-inflationary economic growth.

But the Fed noted that M1 averaged $611.1 billion during October, down slightly from $611.7 billion in September, a sign some analysts said could point to a slowdown in the rapid money growth during the latter half of the year. The Fed tries to provide enough money to stimulate the economy while avoiding a renewal of high inflation.

The Fed has said it would like to see M1 grow between 3% and 8% from the second quarter of this year through the fourth quarter. For the latest 13 weeks, M1 averaged $609.9 billion, a 12.8% rate of gain from the previous 13 weeks.

Some analysts pointed to the slight growth reported for the week of Nov. 4, following a $2.2-billion drop in M1 during the previous week, as a sign of possible moderation in the growth of the money supply over the rest of 1985.

“For the rest of the year there should be growth, but not as great as the past several months,” said Ray Stone, manager of financial economics at the investment firm Merrill Lynch, Pierce Fenner & Smith.

The Fed also reported that a broader measure of the money supply, known as M2, averaged $2.532 trillion during October, up $4.2 billion from the previous month. A still broader measure known as M3 averaged $3.1736 trillion in October, up from September’s average of $3.1641 trillion.

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.

In other reports:

- The Federal Reserve Bank of New York reported that commercial and industrial loans by major New York City banks rose $594 million in the week ended Nov. 6, compared to an increase of $59 million a week earlier.

- The Federal Reserve said bank borrowings from the Federal Reserve System averaged $258 million during the week ended Nov. 13, down from $597 million in the previous week. For the two weeks ended Nov. 13, borrowings averaged $477 million, against $469 million in the previous two weeks.

- 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 $234.5 billion in the week ended Nov. 13, up from $232.6 billion a week earlier.