Time to Begin Your Journey Exploring Inflation Through Money and Velocity

Analyzing Recent M2 Data Ahead of CPI Release

While the Consumer Price Index (CPI) report is just around the corner, the latest M2 figures deserve attention. Here are some reflections on the current landscape of monetary supply and its velocity. In February, M2 increased by 0.88%, pushing the year-over-year growth to 4.88%. On a quarterly basis, this translates to an annualized rate of 6.65%. Some commentators have noted that pre-pandemic money supply growth hovered near 6%, suggesting today's numbers aren't particularly alarming. However, I disagree with that assessment. Although the absolute level may not signal immediate concern, the underlying trend is unfavorable, and the present growth rate doesn't align with a stable, low-inflation environment.