The Reagan administration has narrowed its choice for the vacant seat on the Federal Reserve Board to a New York economist and a Pennsylvania bank executive, according to administration sources.

The economist is Leif Olsen, the former chief economist of Citibank. His candidacy is being advanced by Beryl W. Sprinkel, chairman of the Council of Economic Advisers. Although Olsen's current views on Fed policy aren't known, in the past he has voiced opinions similar to Sprinkel's about the importance of keeping the money supply growing slowly and steadily.

The bank executive is William Eagleson, retired chairman of Mellon National Corp. in Pittsburgh. Eagleson's chances are enhanced by his background as a banker, the administration sources said. Five of the six current board members are economists.

Once President Reagan fills the vacancy, he will have appointed the entire seven-member board. The current vacancy was created when Henry Wallich, a Nixon appointee, retired for health reasons in December 1986 before completing his term, which would have ended on Jan. 31, 1988. Fed governors have 14-year terms.

Separately, Fed chairman Alan Greenspan yesterday praised the deficit-reduction agreement between President Reagan and Congress as "an important step in the right direction" and said that U.S. trading partners have responded with "significant actions" aimed at alleviating global trade imbalances.

The Fed chairman's statement before two House subcommittees, coming as Congress was struggling to finish action on the budget package, appeared designed to spur lawmakers on. Greenspan's remarks also appeared aimed at refuting criticism that the actions taken by U.S. trading partners -- West Germany, in particular -- were of little value in boosting world economic growth.

Greenspan also said he believes that the $17.6 billion trade deficit reported for October -- a figure that stunned global financial markets when it was released Thursday -- was "an aberration" and that the U.S. trade picture should improve next year. He predicted that the figure for November, when it is released early next month, will "reverse" the impression left by the October number.

Greenspan acknowledged that recent trade data have been "disappointing," especially in light of the falling dollar, which makes U.S. products more competitive on world markets. But he said that when price changes in imports and exports are factored out, the trade figures show "the type of impacts that an exchange-rate decline would be expected to create" -- namely, an increased volume of American products being sold abroad and a decreased volume of foreign products being imported into the United States.

With his testimony coming at a nervous time in financial markets, Greenspan avoided saying anything very meaningful about current Fed policy concerning interest rates, the money supply or the dollar. He did make one cryptic comment about what the Fed has been doing in the wake of the Oct. 19 stock market plunge. When a lawmaker praised him for having pumped reserves into the banking system and then having returned the situation "back to normal," Greenspan said: "I would want to add, I don't think we're quite back to normal."

Analysts said this comment was interpreted by some in the markets as a hint that the Fed still must withdraw some of the money it injected into the system, which in turn would imply that interest rates are unlikely to fall soon. But others dismissed the Fed chairman's remark as too cryptic to imply anything significant.