U.S. Basic Money Pool Shrinks by $5.1 Billion
The nation’s basic money supply fell $5.1 billion in mid-October, the Federal Reserve Board reported Thursday.
The Fed said that M1 shrank to a seasonally adjusted $696.5 billion in the week ended Oct. 13, from a revised $701.6 billion the previous week. M1 includes cash in circulation, deposits in checking accounts and non-bank travelers checks.
For the latest 13 weeks, M1 averaged $689.4 billion, a 16.6% seasonally adjusted annual rate of gain from the previous 13 weeks.
The Fed, in its attempt to supply enough money to stimulate non-inflationary economic expansion, has said it would like to see M1 grow at a rate of between 3% and 8% from the fourth quarter of 1985 through the end of 1986.
The credit market showed no reaction to the change in the money supply, which fell somewhat further than the consensus expectation, a decline of about $3.5 billion. The yield of the bellwether 30-year Treasury bond rose marginally, to 7.72% from 7.71%.
Bond traders were more interested Thursday in the sharp rise of the dollar against the yen, which perhaps indicated that Japanese investors were buying dollars so they could invest in U.S. Treasury securities, said Geoffrey Kurinsky, an economist with Technical Data Corp., a fixed-income analysis firm in Boston.
In other reports:
- The Federal Reserve Bank of New York said the volume of commercial and industrial loans at major New York City banks rose $408 million in the week ended Oct. 15, following a revised gain of $69 million a week earlier. The total for the week was $58.292 billion.
- The Federal Reserve said bank borrowings from the Federal Reserve System averaged $408 million, up from $158 million.
- The Federal Reserve said the total adjusted reserves of member banks averaged $52.317 billion in the two weeks ended Wednesday, up from $51.956 billion in the previous two weeks.
- The Federal Reserve said net free reserves totaled $492 million in the two weeks, up from free reserves of $304 million in the two weeks previous.
