| Actual | Previous | Revised | |
|---|---|---|---|
| Month over Month | -0.1% | 0.6% | 0.5% |
| Year over Year | 3.0% | 3.5% |
Highlights
The month-over-month M4 data show a marginal 0.1 percent decline in broad money supply in October. This followed September's downwardly revised 0.5 percent gain. Annual growth eased from 3.5 percent to 3.0 percent. M4 lending also dipped 0.1 percent on the month.
However, excluding intermediate and other financial corporations the picture was a good deal stronger with M4 expanding 0.7 percent, its largest gain so far in 2024. This made for 4.0 percent annualised growth over the last three months, the fastest rate since April. Similarly-adjusted lending was up a monthly 0.5 percent, putting the annualised rate at fully 5.5 percent, its highest mark since November 2022.
Overall, underlying trends remain positive and relatively the robust lending growth hints that economic momentum may be rather stronger than recent GDP data have indicated. To this end, a cut in Bank Rate next month remains possible, but unlikely. This update takes the UK RPI to minus 25 and the RPI-P to minus 35. This means economic activities in general are well running quite well behind market expectations.
However, excluding intermediate and other financial corporations the picture was a good deal stronger with M4 expanding 0.7 percent, its largest gain so far in 2024. This made for 4.0 percent annualised growth over the last three months, the fastest rate since April. Similarly-adjusted lending was up a monthly 0.5 percent, putting the annualised rate at fully 5.5 percent, its highest mark since November 2022.
Overall, underlying trends remain positive and relatively the robust lending growth hints that economic momentum may be rather stronger than recent GDP data have indicated. To this end, a cut in Bank Rate next month remains possible, but unlikely. This update takes the UK RPI to minus 25 and the RPI-P to minus 35. This means economic activities in general are well running quite well behind market expectations.
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.
