Money Supply Takes Surprise Leap

The nation’s basic money supply surged $3 billion late last month, the Federal Reserve Board reported Thursday.

The increase surprised some analysts, many of whom had predicted that the money measure known as M1 would decline modestly.

The Fed said M1 rose to a seasonally adjusted $648.6 billion in the week ended April 28 from $645.6 billion in the previous week.

Some analysts consider M1, which represents funds readily available for spending, an important indicator of inflation and economic trends. M1 consists of cash in circulation, deposits in checking accounts and non-bank travelers checks.

For the latest 13 weeks, M1 averaged $637.8 billion, an 8.6% seasonally adjusted annual rate of gain from the previous 13 weeks.

The Fed has said it would like to see M1 grow in a range of 3% to 8% from the fourth quarter of 1985 through the final quarter of 1986.

In other reports:

- The Federal Reserve Bank of New York reported that commercial and industrial loans at major New York City banks rose $478 million in the week ended April 30, compared to a decline of $1.56 billion a week earlier.

- The Federal Reserve said commercial paper outstanding nationally fell $536 million in the week ended April 30, bringing the total to $300.36 billion. In the previous week, these corporate IOUs rose $2.06 billion.

- The Federal Reserve said bank borrowings from the Federal Reserve System averaged $344 million a day in the two weeks ended Wednesday, up from the $190-million daily average in the prior two-week period.

- The Federal Reserve said net free reserves in the nation’s banking system averaged $584 million in the two weeks ended Wednesday, compared to net free reserves of $691 million for the prior two-week period.

- The Federal Reserve said total adjusted reserves of member banks averaged $48.07 billion in the two weeks ended Wednesday, up from $46.99 billion in the prior two-week period.