Fed Reports $4.3-Billion Increase in Money Supply

The nation’s basic money supply expanded by $4.3 billion in mid-September, the Federal Reserve Board reported Thursday.

The increase was about double what many analysts had expected, but the gain had little effect on bond prices and interest rates in late trading in the credit markets.

The Fed said the basic money supply, called M1, jumped to a seasonally adjusted $695.1 billion in the week ended Sept. 22 from $690.8 billion in the previous week.

M1 includes cash in circulation, checking deposits and non-bank travelers checks. Because it represents funds readily available for spending, many analysts view M1 as a key factor in the course of interest rates and the economy overall.

The Fed, in its attempt to provide enough money to stimulate economic growth without high inflation, 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.

Currently M1 is growing much faster than that. Over the latest 13 weeks, for example, M1 averaged $683.4 billion, a 17.2% seasonally adjusted annual rate of gain from the previous 13 weeks, the Fed reported.

But the central bank has indicated that it is less concerned with rapid monetary growth than with stimulating the economy, especially since the money supply’s spurt has not yet appeared to push inflation noticeably higher.

In other reports from the Federal Reserve system:

- Commercial and industrial loans at major New York City banks fell $436 million in the week ended Sept. 24, compared with a gain of $517 million a week earlier.

- Commercial paper outstanding nationally rose $39 million in the week ended Sept. 24, to $329.27 billion, compared with an increase of $6.84 billion a week earlier.

- Bank borrowings from the Federal Reserve System averaged $358 million in the week ended Wednesday, down from $544 million the previous week.