The Federal Reserve system's open market committee, which sets monetary policy for the country, voted to tighten that policy somewhat at its April 19 meeting by voting to raise the federal funds rate from 4.75 per cent to 5.25 per cent.

The federal funds rate is the interest banks charge each other for overnight loans and is controlled by the Fed. On May 6, at the recommendation of chairman Arthur F. Burns, the committee raused the target to 5.5.

The committee in minutes released yesterday, expressed some concern that the money supply was growing too fast. The federal funds rate which averaged 4.67 per cent in the four weeks ending April 20, averaged 5.16 per cent in the four weeks ended May 18.

In the week ended May 18, the federal funds rate averaged 5.34 per cent.

In the four weeks ended May 11, the money supply averaged $321.4 billion, up from $318.2 billion in the four weeks ended April 13. In the week ended May 11 the Monday supply fell to $320.8 billion from $321.2 billion in the week ended May 4.

The money supply is the sum of currency in circulation and checking accounts. The fed. goal is to keep the money supply growing at an annual rate between 4.5 per cent and 6.5 per cent.

In the 13 weeks ended May 11, the money supply has been growing at an annual rate of 9.4 per cent. But the committe said that "it expects the annual growth rates over the April-May period" to be in a range of 6 to 10 per cent but that over the money supply will grow between 4.5 per cent and 6.5 per cent.

Most economists think that money supply growth is important to both production and inflation.At the open market committee meeting members - including all seven members of the Fed's board of governors and five of the 12 presidents of Fed branch banks - expressed concern that inflationary pressure are increasing.