Global monetary update: surge exceeds expectations
Simon Ward
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The US, China and Japan, among others, have released March monetary data, with Euroland and UK numbers due this week. Global six-month real money growth, on both narrow and broad definitions, is estimated to have risen sharply. The first chart also contains April forecasts, which take into account US monetary data through 13 April while assuming 1) an oil-driven 1 pp fall in global six-month consumer price momentum and 2) unchanged nominal money growth rates outside the US. Real money growth is projected to approach (narrow definition) or exceed (broad definition) the post-GFC high. Assumption 2) suggests that forecast risk lies to the upside.
Monetary trends are strengthening across countries but the US has played a dominant role in the global pick-up. 52-week growth of M1 (nominal) and M2+ (close to the old M3 definition) rose to 24.8% and 18.4% respectively in the latest week, representing records in weekly data extending back to the early 1980s – second chart. Based on earlier monthly data, annual narrow and broad money growth is the fastest since World War Two.
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