Money and Financial Markets
The sharp decline in interest rates over the past two years reduced the opportunity cost of holding monetary instruments nearly to zero. Consequently, the demand for money, as measured by M2, rose sharply in 2001. As short-term interest rates and opportunity cost stabilized in 2002, M2 growth slowed considerably but accelerated in the spring.
Suggested citation: "Money and Financial Markets," Federal Reserve Bank of Cleveland, Economic Trends, no. 02-12, pp. 05-07, 12.01.2002.