Skip to:
  1. Main navigation
  2. Main content
  3. Footer
Economic Commentary

Accelerating Money Growth: Is M2 Telling Us Something?

When things appear to be working well, there’s a natural reluctance to tinker. For several years now, the policymaking arm of the Federal Reserve System, the Federal Open Market Committee (FOMC), has conducted monetary policy in a framework in which money growth plays no formal operational role. Since the summer of 1993, when Federal Reserve Chairman Alan Greenspan reported that M2 had been de-emphasized, economic outcomes have been quite favorable. Output growth has accelerated to an average rate of about 3 percent over the period, and inflation has fallen to nearly 2 percent thus far in 1997. Moreover, the “core” rate of inflation—the Consumer Price Index (CPI) less food and energy— rose 2.2 percent over the 12-month period ending last September, the smallest annual increase since 1966. Such results do not inspire a significant change in the way policy is implemented.

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

Carlson, John B. 1997. “Accelerating Money Growth: Is M2 Telling Us Something?” Federal Reserve Bank of Cleveland, Economic Commentary 11/1/1997.