The nation's money supply declined by a scant $100 million in the week ended March 26 following a $1 billion drop the week before, the Federal Reserve reported yesterday.
The measure of the money supply known as M1-B -- which includes currency in circulation and checkable deposits at both commercial banks and thrift institutions -- dipped to $391.6 billion.
The more-narrowly-defined money measure MI-A-- which doesn't count checkable deposits at the thrifts -- also fell $100 million to $374.7 billion for the March 26 week, the Fed said.
As Fed Chairman Paul Volcker toldCongress this week, the money supply has been growing at a rate just about inthe middle of the Fed's range of between 3.5 percent and 6 percent for M1-A rose at an annul rate of 4.5 percent from its level 13 weeks before. M1-B rose at a 5.1 percent rate over the same period.
A number of financial analysts have criticezed the Fed for allowing too rapid growth in bank reserves, which cansupport lending activity and later lead to unwanted increases in the money supply. However, in recent weeks the Fed's figures indicate it has been clamping down on reserve growth, too.
It has succeeded, for instance, in pulling down the four-week average of nonborrowed reserves below its level of 13 weeks ago. Over the latest 13-week period, the level of nonborrowed reserves has fallen at an 11.8 prcent annual rate, the Fed said.
That comparison is on the basis of numbers adjusted for changes the Fed made in certain reserve requirements as part of its latest tightening of monetary policy last month.
On that same adjusted basis, total reserves rose at only a 1.9 percent annual rate over the latest 13 weeks to stand at $43.83 billion in the week ended April 2.