Money Supply Rises by $2.7 Billion

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

The increase was in line with analysts’ predictions, however, and the report had no effect on interest rates in the credit markets.

The Fed said M1 rose to a seasonally adjusted $628.6 billion in the week ended Jan. 27 from $625.9 billion in the previous week. M1 includes cash in circulation, deposits in checking accounts and non-bank travelers checks.

For the latest 13 weeks, M1 averaged $622.6 billion, an 11.4% seasonally adjusted annual rate of gain from the previous 13 weeks.

Above Target

The Fed has said it would like to see M1 grow between 4% and 7% in 1986. The increase left M1 $1.4 billion above the upper limit of the Fed’s target. The central bank set the growth targets to enable the economy to grow steadily without triggering a burst of inflation.

Analysts said investors in the credit markets were preoccupied with the outlook for the federal budget deficit and U.S. employment and paid little attention to the new money supply figures.

Economists surveyed in advance of the 4:30 p.m. EST report said that the money supply would rise $2.5 billion, according to Money Market Services of Belmont, Calif.

In other reports:

- The Federal Reserve Bank of New York reported that commercial and industrial loans at major New York City banks fell $1.185 billion in the week ended Jan. 29, compared to a decline of $216 million a week earlier.

- The Federal Reserve said bank borrowings from the Federal Reserve System averaged $374 million in the two-week period ended Jan. 29, up from $143 million in the previous two-week period.

- The Federal Reserve said total adjusted reserves of member banks averaged $45.099 billion, down from $45.540 billion a week earlier.

- The Federal Reserve said net free reserves totaled $562 million in the two weeks ended Jan. 29, down from $1.135 billion a week earlier.

- 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 $235.9 billion in the week ended Wednesday, up from $233.9 billion a week earlier.