Money Supply Up $3.1 Billion in Mid-August

The nation’s basic money supply soared $3.1 billion in mid-August, the Federal Reserve Board reported Thursday, but the bigger-than-expected rise had virtually no response from the credit markets.

The Fed said the narrow measure of money known as M1 rose to a seasonally adjusted $688.1 billion in the week ended Aug. 18 from a revised $685 billion in the previous week. The previous week’s figure originally was estimated by the Fed at $684.9 billion.

M1 includes cash in circulation, deposits in checking accounts and non-bank travelers checks.

Not Very Significant

For the latest 13 weeks, M1 averaged 672.9 billion, a 17.9% rate of gain from the 13 previous weeks. In its attempt to provide enough money to stimulate non-inflationary economic growth, 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. But the Fed also has said that M1 alone has relatively little significance in determining monetary policy.

In other reports:

- The Federal Reserve Bank of New York said commercial and industrial loans at major New York City banks fell $244 million in the week ended Aug. 20, compared to a decline of $293 million a week earlier.

- Commercial paper outstanding nationally rose $3.014 billion to $322.179 billion in the week ended Aug. 20, compared to a $1.292-billion increase in the previous week.

- The Fed estimated that the nation’s banking system averaged free reserves of $395 million in the two weeks ended Wednesday, up from free reserves of $196 million in the previous two-week period.

- Member bank borrowings from the Federal Reserve System averaged $395 million in the two weeks ended Wednesday, up from $386 million in the previous two-week period. Borrowings from the Fed averaged $287 million in the week ended Wednesday, down from $504 million in the previous week.

- Total adjusted reserves of member banks averaged a seasonally adjusted $51.639 billion in the two weeks ended Wednesday, up from $50.834 billion in the two previous weeks.

- 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 $247.8 billion in the week ended Wednesday, up from $246.1 billion a week earlier.