| Actual | Previous | |
|---|---|---|
| Month over Month | -0.1% | 0.3% |
| Year over Year | 1.7% | 2.1% |
Highlights
Broad money contracted in August. A 0.1 percent monthly dip followed an unrevised 0.3 percent increase in July and was the first fall since May. The drop reduced annual M4 growth from 2.1 percent to 1.7 percent.
Elsewhere, there were further signs of a recovery in the housing market as mortgage approvals increased from 62,496 to 64,858, their strongest print since September 2022, and lending picked up from £2.80 billion to £2.86 billion, its best mark since December 2022. At the same time, overall consumer credit rose £1.295 billion, a 3-month high, after a £1.231 billion gain last time.
In line with recent months and notwithstanding the minor decrease in M4, today's financial data remain consistent with respectable economic growth. Accordingly, they further reduce pressure on the BoE to rush into another cut in Bank Rate next month.
Elsewhere, there were further signs of a recovery in the housing market as mortgage approvals increased from 62,496 to 64,858, their strongest print since September 2022, and lending picked up from £2.80 billion to £2.86 billion, its best mark since December 2022. At the same time, overall consumer credit rose £1.295 billion, a 3-month high, after a £1.231 billion gain last time.
In line with recent months and notwithstanding the minor decrease in M4, today's financial data remain consistent with respectable economic growth. Accordingly, they further reduce pressure on the BoE to rush into another cut in Bank Rate next month.
Definition
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.
Description
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.
