Broad money rose 0.5 percent on the month in December. This was its largest increase since January 2023 and sharp enough to lift annual growth from minus 2.3 percent to minus 0.9 percent, a 4-month high. M4 lending was more subdued but a 0.1 percent monthly increase was the third advance in as many months. Excluding intermediate other financial institutions, M4 grew 0.7 percent versus November, only its second gain since last April. Similarly-adjusted lending was up 0.3 percent.

Elsewhere the financial data were again mixed. In the housing market, mortgage approvals climbed from 49,313 to 50,459, their third successive rise and 6-month peak. However, net lending to individuals increased just £0.4 billion after a £2.0 billion jump in November while the increase in total consumer credit eased to £1.20 billion from £2.06 billion.

In sum, the financial data are probably in line with some stabilisation in overall economic activity which will bolster the case of those BoE MPC members arguing against any cut in Bank Rate this 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.