The nation's basic money supply dropped $1.9 billion in the week ended June 21, the Federal Reserve Board reported yesterday.
But it revised the base figures for the previous week upward by $1.4 billion, turning what had earlier been reported as a drop into an increase.
In a footnote to its weekly report, the Fed said it was revising money supply data back to the week of May 10 to reflect errors of processing of cash item adjustment.
The effect of the revisions was not immediately apparent, since the numbers were not available, but analysts suspected that they would show that the money supply has been growing even faster than the high growth rates that have been reported, thus putting more pressure on the Fed to tighten monetary policy and thus raise interest rates.
Too rapid growth in the money supply, many economists believe, increases inflation.
The latest weekly interest rate data meanwhile showed that Citibank, which uses a formula to set its prime rate based on a spread over a three-week moving average of commercial paper rates, could raise the prime rate to 9 percent today. Citibank initiated the last increase to 8 2/4 percent two week ago.
For the week ended June 21, the basic money supply, or M-1, which consists of cash and checking account deposits, fell to a seasonally-adjusted average of $349.3 billion, compared with $351.3 billion the previous week. That second figure had earlier been reported as $349.9 billion.
For the latest four weeks, M-1 averaged $351 billion, or a 12.6 percent annual rate of gain for the last 13 weeks. Last week the figures showed M-1 was growing at an 11.3 percent clip for the statistical quarter. The Fed has set 6.5 percent as the upper limit of its M-1 growth target.
It could not be deduced whether the acceleration in the M-1 growth was due to the revisions, or to a statistical fluke which would have included an earlier sharp drop in the weekly money supply in the new comparison period.
The broader money supply, M-2, declined to an average of $839.7 billion in the latest week, from a revised $840.9 billion the week before, M-2 has been growing at an 8.7 percent over the latest quarter.
Bank loan demand continues to be strong.The Fed reported that loans at New York City banks were up $235 million, after an increase of $418 million in the previous week, and a decline of $21 million in the comparable week a year ago.
Key interest rates showed a sharp increase for a single week. The federal funds rate averaged 7.78 percent up from 7.53 percent the week before. The 3-month treasury bill rate averaged 6.87 percent up for the week, from 6.73 percent.