Underscoring the general upward movement of short-term interest rates during the last two months, the Federal Reserve Board yesterday increased from 10 percent to 11 percent the rate the Fed charges when financial institutions borrow from it.

This increase in the Fed's discount rate, the board said in a statement, "is part of the continuing policy of the Federal Reserve to discourage excessive growth in the monetary aggregates."

All seven members of the board voted to approve the increase.

That emphasis was intended to counter criticism from a number of financial analysts that the Fed is not keeping a tight enough rein on the growth of the money supply. For instance, one measure of money, Ml-B, which includes currency in circulation and checking deposits at financial institutions, surged upward in August and in the last two weeks alone climbed another $3.3 billion. u

As growth of the money supply outstripped the Federal Reserve's own short-term targets, interest rates shot up in anticipation of a tightening by the Fed and because the demand for loans increased sharply.

With the unexpected bottoming of the recession, probably in July, business and commercial demand for short-term money rose. At the same time, corporations were taking advantage of the big drop in long-term rates to sell large new issues of long-term bonds.

In mid-July, to get money to lend, banks were paying only about 8 1/2 percent on 90-day certificates of deposit in denominations of $100,000 or more. pBy this week, the rate had risen to 11 1/4 percent.

This jump in the cost of banks' funds encouraged some to begin to borrow from the Fed's discount window at what had become bargain rates. In its statement yesterday, the board explained, "In taking this action, the board also took note of recent appreciable increases in borrowing at the Federal Reserve discount window as short-term market interest rates have risen significantly above the discount rate that has been in effect since July 28."

As for the rates the banks themselves charge on loans to their best business customers, they have risen from 11 percent in mid-August to 12 1/4 percent or 12 1/2 percent.

Long-term rates are rising, too. Home mortgage rates of 14 percent are become widespread in California and other parts of the country, a level housing experts believe could choke off the swift recovery the homebuilding industry has experienced since its low last spring.

Meanwhile, Federal Reserve Governor Henry Wallich told a meeting of the Conference Board in New York that a "premature" income tax cut would drive up the federal budget deficit and interest rates unless the size of the public sector is reduced at the same time.

Treasury Secretary G. William Miller, speaking to the same audience, declared that "even the talk of" an immediate tax cut "incites inflationary expectations, unsettles financial markets and results in rising interest rates."

On Capitol Hill, where Republicans are trying to force a vote on an immediate tax cut, which their presidentail candidate Ronald Reagan favors, Senate Democrats again turned back their attempt in a floor vote yesterday.