Eurozone monetary trends were arguing against ECB policy tightening before the negative shock of Russia’s invasion of Ukraine. Three-month growth of non-financial M3* – the preferred broad money aggregate here – slowed further to 4.2% annualised in January, the lowest since January 2020 and below a mean of 4.9% over 2015-19, when CPI inflation averaged […] Continue reading

Recent market weakness reflects an unfavourable monetary backdrop as well as negative geopolitical developments. Continue reading

Year-on-year headline and core CPI inflation rates rose further in January, to 7.5% and 6.0% respectively, but six-month momentum remained below peaks reached in July-August – see chart 1. Chart 1 The fundamental cause of current high inflation is excessive monetary expansion in 2020-21 but six-month growth of broad money has returned to its pre-pandemic pace – chart 2. […] Continue reading

The global economic slowdown signalled by monetary trends appears to be playing out. Continue reading

The “monetarist” view is that central banks should conduct policy with the aim of stabilising growth of (broad) money at a non-inflationary rate. Continue reading