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Monetary Policy

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Growth in the monetary aggregates was mixed last month, with the narrow measures of money slowing and the broadest aggregate, M2, expanding at a brisk 11.8% annual rate. The rapid growth in M2 followed an 8.3% increase in March and was markedly above the 7% rise posted over the last 12 months. Both numbers are well outside the Federal Open Market Committee’s (FOMC) 5% provisional range, a fact that has many analysts worried that higher inflation may be just around the corner. Others are more sanguine, however, noting that the bulk of the M2 surge reflects continued vigorous growth in real GDP, not an “easy money” stance on the part of the Fed.

Suggested citation: “Monetary Policy,” Federal Reserve Bank of Cleveland, Economic Trends, no. 98-05, pp. 02-04, 05.01.1998.

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