Many have argued recently that UK interest rates should be cut, despite the recent acceleration in price inflation, because money supply growth is collapsing. We think this view is based on an incorrect reading of recent M4 data. It is true that M4 growth is decelerating but it still remains higher than is consistent with a withdrawal of monetary stimulus from the economy. It is well above its long run average and so still consistent with accelerating price inflation. It thus seems extremely ...
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