{"id":3020,"date":"2010-06-29T14:46:13","date_gmt":"2010-06-29T14:46:13","guid":{"rendered":"https:\/\/mmm.9dotdigital.ca\/?p=3020"},"modified":"2025-03-27T15:49:04","modified_gmt":"2025-03-27T15:49:04","slug":"uk-money-numbers-m4-stronger-since-qe-end","status":"publish","type":"post","link":"https:\/\/mmm.9dotdigital.ca\/?p=3020","title":{"rendered":"UK money numbers: M4 stronger since QE end"},"content":{"rendered":"<p>The Bank of England&#8217;s favoured broad money measure &ndash; M4 excluding deposits held by non-bank financial intermediaries &ndash; continued to strengthen in May, arguing against an extension of official gilt-buying. Broad money has surged at a 9.2% annualised rate over the last three months.<\/p>\n<p>Sectoral detail shows that recent growth has been focused on financial institutions&nbsp;&ndash; M4 held by households and non-financial corporations rose by 1.5% annualised in the three months to May. Financial money, however, is likely to be transferred to other sectors (e.g. to&nbsp;non-financial firms via purchases of new issues of equities and bonds).<\/p>\n<p>The broad money pick-up is encouraging but narrow money, M1, has recently been a better guide to economic prospects. M1 contracted as the economy entered recession in mid 2008 but recovered strongly in mid 2009, presaging GDP expansion late last year &ndash; see first chart. Annual growth has stabilised, consistent with a continuing economic upswing.<\/p>\n<p>The corporate liquidity ratio (i.e. non-financial firms&#8217; sterling and foreign currency deposits divided by their bank borrowing) is little changed since March but remains well above its early 2009 low, supporting hopes of a revival in business investment and hiring &ndash; second chart.<\/p>\n<p>In terms of the &#8220;credit counterparts&#8221; arithmetic, the pick-up in the Bank&#8217;s M4 measure since gilt-buying ended in January mainly reflects a larger offsetting swing in &#8220;sterling net non-deposit liabilities&#8221;. Banks, in other words, had&nbsp;been funding assets through capital issues and longer-term borrowing but have switched to deposit financing more recently.<\/p>\n<p>Reflecting capital flight from the Eurozone, foreign purchases of gilts and Treasury bills were again strong in May at a combined &pound;7.1 billion, though down from &pound;14.9 billion and &pound;18.7 billion respectively in April and March.\ufeff<\/p>\n<p><span class=\"full-image-block ssNonEditable\"><span><img decoding=\"async\" src=\"\/storage\/graphs\/uk-money-290610-2-1.gif?__SQUARESPACE_CACHEVERSION=1277825476344\" alt=\"\" \/><\/span><\/span><br \/><span class=\"full-image-block ssNonEditable\"><span><img decoding=\"async\" src=\"\/storage\/graphs\/uk-corp-290610-2-2.gif?__SQUARESPACE_CACHEVERSION=1277825495446\" alt=\"\" \/><\/span><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Bank of England&#8217;s favoured broad money measure &ndash; M4 excluding deposits held by non-bank financial intermediaries &ndash; continued to strengthen in May, arguing against an extension of official gilt-buying. Broad money has surged at a 9.2% annualised rate over the last three months. Sectoral detail shows that recent growth has been focused on financial [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-3020","post","type-post","status-publish","format-standard","hentry","category-money-moves-markets"],"_links":{"self":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/3020","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=3020"}],"version-history":[{"count":1,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/3020\/revisions"}],"predecessor-version":[{"id":5329,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/3020\/revisions\/5329"}],"wp:attachment":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=3020"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=3020"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=3020"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}