An interesting feature of the August MPC minutes is that the “Money, credit, demand and output” section includes, for once, a discussion of monetary trends. This may reflect the influence of the Bank of England’s new chief economist, Andrew Haldane.

The discussion is relatively extensive and implies that monetary trends are consistent with continued strong economic growth, in line with the assessment here. In particular, it is suggested that households hold “excess” broad money balances that will be spent, while rapid expansion of corporate deposits supports optimism about business investment. There is also an indirect reference to narrow money buoyancy in an observation about households switching from time to sight deposits.

Mr Haldane was co-author of a 1995 Bank of England working paper Money as an Indicator, which found “strong and significant effects from narrow money through to nominal GDP and, in particular, prices”. As the paper noted, this matched a much earlier (1970) Bank study by Andrew Crockett, which concluded that “the money stock, narrowly defined (M1), seems to be positively related to subsequent changes in expenditure”.

If the above interpretation is correct, Mr Haldane will be placing significant weight on monetary trends and, if current strength continues, is likely to shift into the interest-rate-rise camp. (July monetary statistics are released on 1 September.)