GlobalMoney growth is accelerating across major monetary center countries with the exception of Japan. Three-month money growth is stronger than six-month money growth across all countries in the table except Japan; three-month money growth also is stronger than 12-month money growth across the table except in Japan.
Looking at money growth rates expressed in real terms, three-month money growth is stronger than 12-month money growth for all countries including Japan. However, that does not mean that money growth is strong; it just means that it's stronger than it was 12-months ago. For example, in the euro area, three-month money growth is still negative, as it is in the United States. However, the United Kingdom and Japan report non-negative values with U.K. money growth in real terms over three months at a 0.7% annual rate while Japanese money growth over three months expressed in real terms is flat. In all comparison, those yield accelerations.
EMU In the European Monetary Union, money growth has been accelerating from 12-months to six-months to three-months steadily. Credit to residents also has been expanding on that timeline as has private credit. Credit growth expressed in real terms also shows progressively improving growth rates from 2-years to 12-months to six-months to three-months. However, those increments are still small and on all those timelines credit growth is still contracting. It's just contracting progressively at a weaker pace.
The chart at the top shows how nominal growth rates of money supply had turned negative and have since been trending more toward zero with the exception of Japan where the money growth rate never really contracted but it edged down and since has stabilized.
Although inflation progress has slowed broadly, there has been little backtracking on the progress that inflation has made since coming down from its peak in these various countries. However, inflation is still above-target in these inflation-targeting countries and that remains a problem especially with the rate of change and inflation having slowed to a crawl. As of March of last year, inflation across these four countries on average still was accelerating. Deceleration began in April 2023. Prices fell the most sharply on average in October and November of last year when the average year-on-year drop for the 12-month inflation rate compared to one year-earlier was -4.4%. That average drop has pulled back to -2.9% April 2024. While that May still seemed large, let’s look more closely. In January, February and March, the average inflation rate that these four countries reported in each of these months was 3.1% and by April that had dropped to only 2.9%. For some countries, shorter trend inflation rates are showing a rising trend. The most recent trend gets more complicated, but all of these countries reached a recent low three-month inflation rate in January-2024 or November-23 or December-23. Compared to their respective lows, current (April 3-month) inflation shows an acceleration averaging 2.1% from those lows. This is not an argument intended to support the notion that inflation is accelerating, just to point out that deceleration has really run into a snag and the future is, therefore, less clear than it seemed at the end of 2023.
In the United States, there has been some backtracking of inflation, and although a few months ago the Fed seemed on a fast track to three rate reductions this year, the Fed has been backtracking furiously with a number of Federal Reserve officials scaling back their expectations for Fed policy this year and a number of private institutions no longer looking for Fed cuts at all from the U.S. in 2024.
