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Britain’s Falling Money Supply Clouds Chance of a Brisk Rebound

Ashley Webb, UK economist at Capital Economics, said the “negative annual growth rate in M4ex leaves the UK looking like a bit of an outlier” compared to rising money supply in the eurozone and the US.

However, he cautioned that the recent trend has been more positive than the annual rate suggests, pointing to recent growth on a three-month annualized basis.

“The relationship between money growth and CPI inflation isn’t very strong,” Webb said. “But at face value the annual growth rate in M4ex points to further falls in UK CPI inflation, to just above zero in around 18 months time.”

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