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Monetary Policy

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Growth in the sweep-adjusted monetary base (total currency in circulation plus total reserves including depository institutions’ vault cash) has increased its annualized year-to-date growth rate to 6.3% in 2004, up sharply from its year-to-date rate of 3.9% in May. This rise brings it closer to its five-year average of 7.5%. Current year-to-date annualized growth is less than 0.1% above 2003. Surprisingly, sweep-adjusted base growth increased slightly despite declines in total reserves growth (8.2% in 2003 and 7.7% currently) and currency growth (5.9% in 2003 and 5.4% currently). The cause is strong growth in cumulative sweeps—13.8% currently and 9.8% in 2003.

Suggested citation: "Monetary Policy," Federal Reserve Bank of Cleveland, Economic Trends, no. 04-10, pp. 04, 10.01.2004.

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