The evidence so far suggests that, as well as tightening terms for borrowers, they are improving rates offered on retail deposits. Where does that leave us on Money? It is clear enough from the long-run relationship between money growth and inflation that prolonged shifts in money growth can be an amber light (Chart 18).
And possible liquidity effects mean that, through risk premia, shifts in the quantity of money may feed back into financial asset markets and so into broader credit conditions. But there are no “easy wins” when it comes to analysing Money demand and supply. 19 Money and credit in the current conjuncture Those challenges are certainly apparent right now.