On the other hand, M3 is slowing down markedly (3.5 per cent in January on an annual basis, from 6.3 last September) and M1 growth became negative in January (-0.7 per cent, a historical minimum). When assessed in real terms, the dynamics of both aggregates are in deeply negative territory and at historical minima.
If protracted, the fall in money, and the related freezing of funds in more illiquid forms of savings, could limit consumption and investment, helping to dampen short-to-medium term inflation expectations. This would further reinforce the reasons for a cautious conduct of monetary policy.