Shadow Monetary Policy Committee 9th January 2024 Shadow Monetary Policy Committee votes to cut Bank Rate ¼% to 5%

When he asked as to the significance of the money supply figures in indicating monetary policy stance, the representative from the Reserve Bank of Dallas said that there was an index of monetary conditions made up of over one hundred items of which the money supply was just one! The index suggested that inflation had not yet been squeezed out of the system in the USA and interest rates would have. [...] Juan Castaneda said that this means that the monetary overhang in the USA is still there but the key difference with the UK is that the monetary overhang in the UK has been eliminated. [...] So, the effects of the decline in the quantity of money will be seen in the next six months. [...] John Greenwood said that the Bank had underestimated the inflation from the monetary growth and is continuing to sleepwalk over the effects of the monetary contraction and the market is buying their narrative that the rate of growth of money has no implication for inflation. [...] The priority for the Bank is to stabilise the rate of growth of stabilise (broad) money in the 4-5% range per year.