Growth In Key Money Supply Gauge Slows

LONDON (Reuters) - Annual growth in a key component of money supply slowed to its weakest since 1999 in the second quarter, Bank of England data showed on Tuesday, just two days before the central bank decides whether to expand its quantitative easing programme.

M4 broad money supply growth, excluding holdings of intermediate other financial corporations, slowed to an annual rate of 3.1 percent in the second quarter of 2009 from a downwardly revised 3.8 percent in the first quarter.

The Bank has identified this subcomponent of M4 growth as a key gauge of whether its quantitative easing policy is boosting the money supply, because it strips out the volatile and sometimes inflated money holdings of firms such as clearing houses included in the overall M4 measure.

"It still shows that money growth is weak up to and including the second quarter," said Philip Shaw, economist at Investec.
Source: NY Times