Several major New York banks raised their broker loan rates yesterday, reversing the week-old decline in interest rates.

The rise, from 19 1/2 percent to 20 1/2 percent, reflected a sharp upturn in money market rates which could lead to an increase in the prime rate, analysts said.

Chase Manhattan, Manufacturers Hanover and Chemical Bank all raised their broker rates, charged for overnight secured loans to brokers.

The prime rate itself was lowered from 20 1/2 percent to 20 percent just last week amid hopes that interest rates had peaked. But yesterday's sharp rise in the key federal funds rate, which in turn led to the broker rate rises, could signal an end to the decline, same analysts said yesterday.

One reason for the rate jump -- the federal funds rate was trading between 20 percent and 20 1/2 percent yesterday, up from 17 percent last week -- is that the Fed is "paying absolutely no attention to day-to-day fluctuations in the funds rate," economist David M. Jones said yesterday.

This is in line with the Federal Reserve Board's recent policy, advocated strongly the money supply and ignoring the effects of this control on interest rates. This entails considerably more volatility in interest rates. Yesterday's rise could have been due to special factors such as seasonal inbalances in reserves or the surprise offerings of two cash management bills by the Treasury, analysts said.

Meanwhile, William A. Niskanen, presidential nominee for the second seat on the Council of Economic Advisers, said in Senate confirmation hearings yesterday that he expected interest rates to decline from their present "temporary and unusually high" level.

Niskanen also acknowledged that bringing down inflation usually incurs a cost in terms of lost real output. He said that the Reagan proposal to reduce inflation over five years could be achieved "without any significant prospect of a recession."

The administration is forecasting a rapid rise in growth over the next few years, at the same time that inflation comes down. Niskanen said that inflation could be reduced by controlling the money supply. He said this had been done in the early 1970s, although at the cost of "a wringer" of a recession. "There is no reason to tolerate that large a reduction in real output," he added.