Broad money growth remained very weak in March. A 0.6 percent monthly contraction in M4 constituted the fourth decline in the last five months and reduced annual growth from 1.1 percent to just 0.4 percent, its weakest rate since December 2015. Excluding intermediate other financial corporations, the story was much the same with the monthly change also minus 0.6 percent and annual growth 1.4 percent, down from 3.1 percent in March.

Declining M4 lending was again a key factor, with March seeing a 0.2 percent monthly contraction, its third fall in as many months. Yearly lending growth now stands at minus 1.1 percent. Adjusted to exclude intermediate other financial corporations, monthly growth was flat, the first time the measure has been negative since January but still soft enough to reduce annual growth from minus 0.2 percent to minus 0.3 percent. Elsewhere, mortgage approvals were surprisingly firm, rising from 44,126 to 52,011 but lending (£0.02 billion after £0.67 billion) all but dried up. Net lending to individuals (£1.6 billion after £2.2 billion) similarly slowed, although overall consumer credit (£1.574 billion after £1.485 billion) was a little firmer.

Overall, the March data are again soft and suggest that the more interest rate sensitive sectors of the economy are responding to BoE tightening. Even so, the MPC still seems set to vote to raise Bank Rate again next week.

M4 is the Bank of England's main broad measure of money supply. There is no target for M4 and in practice the central bank tends to follow an adjusted measure that excludes intermediate other financial corporations in order to get a handle on current underlying trends. The M4 private sector lending counterpart is the most closely watched aspect of the report.

M4 is similar to the M3 measure used in some other countries. M4 includes everything in M2 (also called the retail component of M4) plus other deposits with an original maturity of up to five years; other claims on financial institutions such as repos and bank acceptances; debt instruments issued by financial institutions including commercial paper and bonds with a maturity of up to five years. Understanding the role of money in the economy has always been an important issue for policymakers. And the pickup in broad money growth and decline in credit spreads over the past three years together with more recent financial market turbulence has made it a particularly pertinent issue. Monetary data can potentially provide important corroborative or incremental information about the outlook for inflation. Quantitative easing is essentially a policy aimed at boosting money supply.