UK money trends continue gradual improvement
Simon Ward
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Provisional April monetary statistics released today do not include new information on the MPC's favoured broad money aggregate – M4 excluding deposits of "intermediate other financial corporations". On the basis of the data provided, however, this measure is likely to have grown moderately last month.
Headline M4 rose by just 0.1% in April but the release notes a negative impact from a fall in repos with "other financial corporations". To the extent that this decline reflected transactions with financial intermediaries, it will not affect the MPC's adjusted M4 measure. Without the repo change, M4 would have grown by 0.5% last month, or about 6% annualised.
The Bank of England's gilt purchases were reflected in a large public sector contribution to M4 growth in April – "net sterling lending to the public sector" amounted to £30 billion or 1.5% of M4. This boost, however, was partly offset by weakness in private sector sterling credit and a large fall in "net other assets".
Overall, the figures – while incomplete – are slightly disappointing and support the MPC's decision to expand the QE programme.
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