Money Supply Rises $5.3 Billion

The nation’s basic money supply rose $5.3 billion in early December, the Federal Reserve Board reported Thursday.

The latest increase in the money supply measure known as M1--which represents funds readily available for spending--left it far above the targets set by the Fed for non-inflationary economic growth. But analysts said the credit markets shrugged off the report.

In fact, interest rates on bellwether 30-year Treasury bonds fell slightly following the 4:30 p.m. EST release of the report.

The Fed said M1 rose to a seasonally adjusted $626.1 billion in the week ended Dec. 2 from an adjusted $620.8 billion in the previous week. The figure for the previous week had originally been reported as $621 billion.

M1 includes cash in circulation, deposits in checking accounts and non-bank travelers checks.

For the latest 13 weeks, M1 averaged $614 billion, a 10.5% seasonally adjusted annual rate of gain from the previous 13 weeks. 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.

The Fed also said two broader measures of the money supply increased in the latest reporting period. M2, which includes M1 plus accounts such as savings deposits and money-market mutual funds, rose to an average of $2.5473 trillion in November from $2.5334 trillion in October.

M3, which is the sum of M2 plus less-liquid accounts, such as certificates of deposit in minimum denominations of $100,000, rose to an average of $3.1906 trillion from $3.1773 trillion in October, the Fed reported.

In other reports:

- The Federal Reserve Bank of New York reported that commercial and industrial loans at major New York City banks rose $1.097 billion for the week ended Dec. 4, compared to a decline of $180 million a week earlier.

- The Federal Reserve said bank borrowings from the Federal Reserve System averaged $2.425 billion in the two-week period ended Dec. 4, up from $656 million in the previous two-week period.

- Borrowings from the Fed averaged $163 million in the week ended Wednesday, down from the previous week’s $1.083 billion.

- The Federal Reserve said total adjusted reserves of member banks averaged $45.030 billion in the two weeks ended Dec. 4, compared to $44.127 billion in the prior two weeks.