Policy Convergence But Pace of Liquidity Growth Diverges

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Policy Convergence But Pace of Liquidity Growth Diverges

 

Latest weekly balance sheet data from major Central Banks show aggregate liquidity growth slowing further to 15.8%, less than half the 2021-peak of 35% ( 3m ann. rate). The G4 equivalent (ex. China) has dropped to 16.0% versus its recent 41% peak. The driving force has been US monetary base growth which has plummeted to 0.2%, a world away from the whopping 78% recorded in early April. The ECB and Bank of England looked to be on the same pathway, but the downturn in their liquidity growth has been much less pronounced and there are signs of stability in the last 2-3 weeks. Meanwhile, the People’s Bank of China and the Bank of Japan have stepped up the pace of liquidity injections.

 

 

 

See our latest published research, Weekly Global Liquidity Update 28 June  2021

 

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