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Economic Commentary

Monetarism and the Ml Target

The Federal Reserve has once again decreased emphasis on the Ml target as a guide for short-run policy actions. In the first half of 1986, Ml growth averaged 11.8 percent, while nominal gross national product (GNP) growth averaged only 4.6 percent and inflation continued to be lower than expected. Policymakers and economists, including leading monetarists, argue that Ml is no longer an appropriate short-run guide for monetary policy.

The views authors express in Economic Commentary are theirs and not necessarily those of the Federal Reserve Bank of Cleveland or the Board of Governors of the Federal Reserve System. The series editor is Tasia Hane. This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License. This paper and its data are subject to revision; please visit for updates.

Suggested Citation

Gavin, William T. 1986. “Monetarism and the Ml Target” Federal Reserve Bank of Cleveland, Economic Commentary 10/1/1986.