Money Supply Climbs $1.5 Billion

The nation’s basic money supply rose $1.5 billion in early November, the Federal Reserve Board reported Thursday. The increase matched analysts’ expectations.

The Fed said the basic money measure, known as M1, increased to a seasonally adjusted $613.6 billion in the week ended Nov. 11 from a revised $612.1 billion in the previous week. The previous week’s figure had originally been estimated at $611.6 billion.

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

Above Upper Target

The Fed tries to provide enough money to stimulate the economy without pushing up inflation. The $1.5-billion increase left the basic money supply $7.2 billion above the upper limit of the Fed’s target range for non-inflationary growth.

The Fed has said it would like to see M1 grow between 3% and 8% in the second half of this year. For the last 13 weeks, M1 averaged $610.9 billion, a 12.1% seasonally adjusted annual rate of gain from the previous 13 weeks.

The $1.5-billion increase matched the median of predictions by 42 analysts surveyed by Money Market Services of Belmont, Calif.

Analysts said the money supply increase probably meant that the Fed would not act anytime soon to cut the discount rate--the interest charged on short-term loans by the Fed to major banks.

In other reports:

- The Federal Reserve Bank of New York reported that commercial and industrial loans by major New York City banks fell $517 million in the week ended Nov. 13, compared to an increase of $594 million a week earlier.

- The Federal Reserve said bank borrowings from the Federal Reserve System averaged $1.055 billion during the week ended Wednesday, up sharply from $258 million in the previous week. For the two weeks ended Wednesday, borrowings averaged $657 million, up from $477 million in the previous two weeks.

A Federal Reserve Bank of New York spokesman said the unusually high borrowings may have been caused by wire problems at some New York City banks, and some Federal Reserve banks outside New York kept the federal funds wire and securities wire open until late in the evening.

- 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 $230.6 billion in the week ended Wednesday, down from $234.4 billion a week earlier.