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Money and Financial Markets

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Growth rates for broad money measures, such as M2 and M3, slowed markedly in the early months of 2002. For example, M2 growth fell to an annual rate of 0.4% from January to April 2002, in marked contrast with 2001 growth rates that were in excess of 10%. Much of this year’s M2 growth is attributable to moderate increases in holdings of savings deposits. Most other M2 components have declined since the year began, the most significant shift being away from retail money funds. The slower growth of broad monetary aggregates may reflect consumers’ switch from low-risk, low-return assets to those with higher returns and greater risk.

Suggested citation: "Money and Financial Markets," Federal Reserve Bank of Cleveland, Economic Trends, no. 02-06, pp. 05-07, 06.01.2002.

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