Euro Area Money Supply Growth Reach New High

M1 growth in the euro area rose sharply in April, from 5.9% to 8.4%, with the 6 month rate being 9.1% and the 3 month rate being 11.9%. In August last year, it was as low as 0.2%, but the sharp interest rate cuts since then have made monetary conditions a lot more inflationary.

On the other hand, the consumer price inflation rate fell back to 0.0%. But that reflects the brief period of price deflation in late 2008, and is therefore as irrelevant as the high 12 month figures in August and September last year were for the short term outlook. The more forward looking commodity price markets are already seeing the effects of inflationary pumping by the ECB and other central banks.