he measure of the nation's money supply known as M1-B rose $1 billion in the week ended Oct. 21, and the Federal Reserve gave a clear signal that it intends to restimulate still-sluggish money growth.
After the market closed the Fed announced it had cut the discount rate it charges banks for loans to 13 percent from 14 percent. It left in place the 2 percent surcharge for large and frequent borrowers.
M1-B, which is comprised of cash in circulation, checking accounts and NOW accounts, rose to $434.3 billion in the week from $433.3 billion the previous week.
In normal times, a $1 billion increase in M1-B would be enough to send interest rates soaring out of fears of further Fed credit-tightening. But despite the latest rise, monetary growth continues to be well below the Fed's minimum targets.
For the latest four weeks, M1-B averaged $432.3 billion, a 2.9 percent seasonally adjusted rate of gain from 13 weeks ago.
A narrower money-supply measure known as M1-A, which includes cash in circulation and non-interest-bearing checking accounts in commercial banks, rose $500 million in the week ended Oct. 21 to a seasonally adjusted average $362.1 billion.
The federal funds rate rose to 14.87 percent from 15.32 percent.
Commercial and industrial loans at the nation's major banks fell $34 million in the week ended Oct. 21 compared with a gain of $25 million the previous week.