The Beginning of the End? Fed Liquidity Growth Slows Sharply

The Beginning of the End? Fed Liquidity Growth Slows Sharply

 

Latest weekly balance sheet data from major Central Banks show aggregate liquidity growth dropping back to 25% from a 6-week average of +30% ( 3m ann.). The G4 equivalent (ex. China) slowed to 29% from the recent 37% average. The Fed is behind the downwards move, with monetary base growth slowing sharply to 40% (3m ann.), compared to a 70% average. Both reverse repos and non-reserve deposits rose sharply in the week. And, importantly, this slowdown is not being offset by a simultaneous rundown in the Treasury General Account. Elsewhere, liquidity growth is little changed on the previous week.