Global money supply: Surprise slowdown warning – Standard Chartered

Sandeep Kanihama FXStreet Contributor

Samantha Amerasinghe, Economist at Standard Chartered, points out that their measure of global broad money supply, SC Divisia slowed to 6.6% y/y in Q1-2018 from 7.2% in the prior quarter, the largest quarterly slowdown since March 2017.

Key Quotes

“Divisia growth has been negative since September 2016, barring the past two quarters in which still-accommodative monetary policy and distortions caused by India’s demonetisation exercise led to a small uptick.”

“SC Divisia signals a possible tapering of global growth in 2018 due to the more hawkish stance of central banks in reversing quantitative easing (QE).”

“Divisia money supply has a good correlation with GDP growth and is a useful indicator for GDP trends.”

“The slower pace of Divisia growth in Q1-2018 is primarily due to the UK and euro area; they witnessed 1.5ppt and 1.0ppt falls in broad money supply growth, respectively, compared with Q4-2017, due to the gradual withdrawal of monetary stimulus.”

Author

Sandeep Kanihama

FXStreet Contributor

Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.

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