Broad money fell sharply in September. Following an unrevised 0.2 percent monthly rise in August, M4 slumped fully 1.1 percent, its largest drop since November 2022. This was the aggregate's third contraction in the last five months and makes an already solid downtrend all the steeper. Annual growth collapsed from minus 0.8 percent to minus 3.9 percent, its weakest reading since August 2012. M4 lending was down 0.4 percent versus August, lowering its yearly rate from minus 1.6 percent to minus 3.1 percent.

Excluding intermediate other financial institutions, the picture was no better with a 1.1 percent monthly decline in M4 that slashed annual growth from minus 0.6 percent to minus 4.2 percent. Similarly adjusted lending rose 0.2 percent on the month but still fell 2.7 percent from a year ago.

Meanwhile, in the housing market, mortgage approvals slid from 45,447 to 43,328, an 8-month low, and mortgage lending contracted £0.94 billion. At the same time, total consumer credit rose £1.391 billion but this was short of August's £1.68 billion gain.

In sum, the financial data are consistent with a sluggish economy and should slightly increase the likelihood of no change in Bank Rate on Thursday.

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.