Money Supply Climbs $3.7 Billion

The nation’s basic money supply jumped $3.7 billion in mid-January, the Federal Reserve Board said Thursday, but the increase fell within financial analysts’ expectations and had no effect on credit markets.

The Fed said the measure, known as M1, rose to a seasonally adjusted $626.3 billion in the week ended Jan. 20 from $622.6 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 $621.3 billion, an 11.5% seasonally adjusted annual rate of gain from the previous 13 weeks.

The Fed has said it would like to see M1 grow between 4% and 7% from the fourth quarter of 1985 through this year.

No Surprise

Analysts said the latest weekly increase, which they generally had estimated would fall between $3.5 billion and $4 billion, was no surprise. Some analysts said the increase compensated for a large drop in M1 during the previous week.

“This data suggests no shift in Fed policy,” said William Sullivan, director of money-market research for Dean Witter Reynolds, a New York investment firm.

A large increase in M1 over several weeks is considered inflationary and could lead the Fed to make it more difficult to borrow money, thereby raising interest rates, some economists argue.

In other reports:

- The Federal Reserve Bank of New York reported that commercial and industrial loans at major New York City banks fell $137 million in the week ended Jan. 22, compared to a decline of $572 million in the previous week, bringing the total to $58.524 billion.

- The Federal Reserve said bank borrowings from the Federal Reserve System averaged $301 million in the week ended Wednesday, down from $447 million in the previous week.

- The Federal Reserve said total adjusted reserves of member banks averaged $45.111 billion in the two-week period ended Wednesday, down from $45.561 billion in the previous two-week period.

- 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 $233.9 billion in the week ended Wednesday, down from $236.3 billion a week earlier.