The nation's basic money supply shot up $5.3 billion in mid-December, the Federal Reserve Board reported Friday. The increase exceeded analysts' expectations but produced no reaction in the credit markets.
The Fed said M1 rose to a seasonally adjusted $627.9 billion in the week ended Dec. 23 from $622.6 billion in the previous week. M1 represents money readily available for spending and includes cash in circulation, deposits in checking accounts and non-bank travelers checks.
For the latest 13 weeks, M1 averaged $617.1 billion, a 9.4% seasonally adjusted annual rate of gain from the previous 13 weeks. The Fed said it wanted to see M1 grow between 3% and 8% in the second half of 1985. The money supply has been growing far faster than the Fed's target, but the Fed has not taken any action to rein it in, something that could push interest rates higher.
Analysts say the Fed has paid less attention to its monetary targets lately and has focused more on ensuring steady economic growth.
The Fed report is usually released on Thursdays but was delayed because of the New Year's holiday on Wednesday.
In other reports:
- The Federal Reserve said commercial and industrial loans on the books of the nation's large banks rose $3 million in the week ended Dec. 25 after jumping $984 million in the previous week.
- The Federal Reserve Bank of New York reported that commercial and industrial loans at major New York City banks fell $417 million in the week ended Dec. 25, compared to a decline of $308 million a week earlier.
- The Federal Reserve said bank borrowings from the Federal Reserve System averaged $866 million in the two-week period ended Dec. 31, up from $317 million in the previous two-week period.