Newspaper article THE JOURNAL RECORD

Nation's Money Supply Falls $2.2 Billion

Newspaper article THE JOURNAL RECORD

Nation's Money Supply Falls $2.2 Billion

Article excerpt

NEW YORK (AP) - The nation's basic money supply fell $2.2 billion in early March, leaving it comfortably within desired bounds, the Federal Reserve Board reported Thursday.

The Fed said M1 declined to a seasonally adjusted $631.8 billion in the week ended March 3 from $634 billion the previous week. M1, representing funds readily available for spending, includes deposits in checking accounts and cash held by the public.

The drop in M1 almost met the median estimate of 39 analysts surveyed in advance of the report by the economic consulting firm Money Market Services Inc. of Redwood City, Calif.

After the 4:30 p.m. EST release of the numbers, bond prices improved slightly.

Monthly figures on two other, more comprehensive measures of the U.S. money supply were also published and showed similarly well-behaved growth.

""The report suggests that the Fed doesn't have to worry about the monetary aggregates,'' said David A. Wyss, chief financial economist of Data Resources Inc., Lexington, Mass.

The Fed, in its attempt to provide enough money to stimulate non-inflationary economic growth, has said it would like to see M1 grow in a range of 3 percent to 8 percent from the fourth quarter of 1985 through the final quarter of 1986.

The report said M2 rose $7.8 billion in February and averaged $2,577 billion during the month. M3 averaged $3,240 billion, up from $3.223 billion in January.

M2 is made up of M1 and such accounts as savings deposits and money-market mutual funds. M3 is the sum of M2 plus less-liquid accounts, such as certificates of deposit in minimum denominations of $100,000.

When the Fed last Friday announced the half-point cut in its principal loan rate to 7 percent, it said one of the things making the move possible was that ""growth in the various monetary aggregates has been more limited this year...''

That limited growth gives the central bank the flexibility to become more generous with credit conditions in an effort to snap the economy out of the doldrums, some analysts say. …

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