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Interpreting the Money Numbers

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Some economists are concerned that higher inflation is just around the corner. One piece of evidence is high money growth. However, as the charts above show, there does not seem to be a tight relationship between money growth and inflation. Of course, some would argue that money growth translates into inflation with a lag, as it did in the 1970s. Yet, inflation dropped sharply in the early 1980s with no corresponding movement in any monetary aggregate.

Suggested citation: "Interpreting the Money Numbers," Federal Reserve Bank of Cleveland, Economic Trends, no. 99-04, pp. 04-05, 04.01.1999.

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