We here review the impact of the GDP increase on inflation projections.
First the following shows the M2 growth up to the latest data, including Q3 2009. M2 has remained flat over the duration of the Recession and in the last Quarter it has even been reduced again.
The following shows the M2 volatility and it changes. It continues to show a dampening in its volatility which suggest some stability. We are still concerned that the banks maintain their excess reserves and once that is released it will increase M2.
The last chart shows the elements which add to the inflation calculation from the M2 data, velocity and GDP change. The resultant inflation estimate is still low for Q3. We have not yet compared that to the CPI changes but the core inflation resulting from the monetary calculation remains low.
First the following shows the M2 growth up to the latest data, including Q3 2009. M2 has remained flat over the duration of the Recession and in the last Quarter it has even been reduced again.
The following shows the M2 volatility and it changes. It continues to show a dampening in its volatility which suggest some stability. We are still concerned that the banks maintain their excess reserves and once that is released it will increase M2.
The last chart shows the elements which add to the inflation calculation from the M2 data, velocity and GDP change. The resultant inflation estimate is still low for Q3. We have not yet compared that to the CPI changes but the core inflation resulting from the monetary calculation remains low.
Posts
