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Money and Financial Markets

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Growth in the broad monetary aggregates appears to have slowed considerably during January 2002. However, as we have cautioned in past issues of this publication, year-to-date growth rates need careful interpretation. In January 2002, M2 grew 5.7% year-to-date at an annual rate, seemingly much slower than its year-to-date growth rate for December 2001 (10.2%). However, the latter incorporates information from the previous year and averages across both fast- and slow-growing months. If the January growth rate were calculated over a like time span, it would be clear that although M2 growth did slow in January, it declined only about half a percentage point to 9.7%. This caution applies equally to M3 growth (6.0% annualized year-to-date for January 2002).

Suggested citation: "Money and Financial Markets," Federal Reserve Bank of Cleveland, Economic Trends, no. 02-03, pp. 05-06, 03.01.2002.

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