The nation's basic money supply increased by $1.2 billion for the week ending Oct. 26 to $334.6 billion, figures released today revealed.

The increase, though sizeable, was not the bulge that analysts had expected following the surprise credit-tightening move by the Federal Reserve Board last Friday and Monday which sent interest rates up another notch and the stock market tumbling.

Analysts speculated that the Fed, on the basis of early figures, anticipated an increase of as much as $3 billion and moved quickly to get the money supply growth rate under control, but held steady later in the week when revised figures indicated a smaller rise.

For the latest four weeks, the basic money supply, or M1 which includes cash and checking account deposits - averaged $333.1 billion, a 9.1 per cent rate of gain from 13 weeks ago. For the month of October, M1 is expected to surge 14 per cent. The Fed, hasset a 6.5 per cent maximum growth rate target for M1.

The broader money supply, or M2 - which also includes bank time deposits - rose $2.1 billion last week to $801 billion. It has been growing at an 8.5 per cent rate over the last statistical quarter.

It is feared that too rapidgrowth in the money supply can bring on accelerating inflation. But in trying to fight the surging increase in the monetary aggregates over the last few months, the Fed has raised short-term interest rates to levels that some economists believe could weaken the economic recovery and start an out-flow of funds from the stock market and from the savings institutions that finance home mortgages.

Today the federal funds rate held steady at 6.625 per cent cut, up from 6.5 per cent a week ago before the latest tightening move took place. Some analysts think the rate on federal funds - which are loans of free reserves banks make to each on an overnight basis and which the Fed uses as a peg for its money market operations - soon may move up to 6.75 per cent. The rate is up nearly 2 per cent since last April.