The chairman of the House Banking Committee urged Citibank yesterday not to raise its current 15 1/4 percent prime lending rate even if its formula based on money market interest rates calls for it.

Rep. Henry Reuss (D-Wis.) argued in a telegram to Citibank, the nation's second largest, that "it would be wrong to mechanically apply your formula" this week because errors in the money supply numbers reported by the Federal Reserve in the last three weeks caused interest rates to rise to artifically high levels.

Citibank usually sets its prime rate each Friday by adding 1.5 percentage points to the average rate for the latest three weeks on large 90-day certificates of deposit in the secondary market. It probably would call for a 15 3/4 percent or 16 percent prime Friday.

"You have ample precedence for using your good judgement instead of your rote formula in times of financial turmoil," he told the bank. "In 1974, at the urging of Chairman Arthur Burns, Citibank held the prime rate at 12 percent for nearly three months, from July 12 to Sept. 27, even though the formula called for 13 percent.

however, many monetary experts believe to the contrary that holding down the prime in 1974 through pressure from the Federal Reserve hurt, rather than helped, the economy. Some go so far as to say that Burns' action, which led banks to curtail their lending sharply since it had become unprofitably, led to such a shortage of credit that it increased the severity of the 1974-75 recession considerably.

After Citibank raised its prime to 15 1/4 percent last week, Reuss sent another telegram asking the bank to lower it. The bank replied that the rate was the result of "the money market's assessment . . . of the government's determination to stick with its anti-inflation program."