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Money and Financial Markets

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The drop in short-term interest rates over the past 18 months sharply reduced the opportunity cost of holding monetary assets. Consequently, the demand for money, as measured by M2, rose sharply in 2001. As short-term rates have stabilized at lower levels, M2 growth has slowed considerably.

Suggested citation: "Money and Financial Markets," Federal Reserve Bank of Cleveland, Economic Trends, no. 02-08, pp. 05-07, 08.01.2002.

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