Former Federal Reserve Board Governor Andrew F. Brimmer has urged the Carter Administration to retreat from its attempt at "jawboning" on bank interest rates.

Otherwise, he said in an address Saturday to the District of Columbia Bankers' Association, the government will run the risk of keeping interest rates artificially low and encouraging a future cycle of inflation.

Brimmer was critical specifically of Office of Management and Budget Director Bert Lance, who recently criticized banks for raising interest rates when he said "loan demand just isn't fair."

In addition, Brimmer condemned a decision by the Council on Wage and Price Stability, in response to congressional requests, to "monitor" interest charges. However, Brimmer said, "I understand that the decision was made reluctantly and that it does not represent a commitment by the Carter Administration to the task of trying to hold down interest rates."

Brimmer also took issue with Lance's description of current loan demand. Currently a consultant in Washington, Brimmer cited figures to show that where commercial and industrial loans at New York City banks declined by $2.2 billion, to $33.5 billion, in the first five months of this year, at an annual rate of decline of 14.8 per cent, loans at all banks in the country rose by $8.4 billion to a total of $185.9 billion - an annual rate of expansion of 11.7 per cent.

The danger in jawboning, the former central bank official recalled, was demonstrated in 1972 when the committee on interests and dividends, a unit of the Nixon Administration that was headed by Federal Reserve Chairman Arthur F. Burns, attempted to restrain bank prime rates at a level well below that which Brimmer said was consistent with prevailing strong demand for bank credit.

"As a consequence, bank credit and the money supply expanded at an excessive rate. This contributed to the subsequent accelleration of inflationary pressures. We certainly would not want to repeat that experience," Brimmer warned.