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BoE to publish key money supply gauge monthly

Published 05/21/2009, 10:59 AM
Updated 05/21/2009, 11:08 AM
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LONDON, May 21 (Reuters) - Britain's central bank will publish a key measure of money supply every month from September as it steps up its analysis of monetary trends during its quantitative easing programme.

The Bank of England's preferred measure of money supply -- M4 excluding intermediate financial corporations -- was published as a seasonally-adjusted quarterly series for the first time earlier this month.

The BoE said on Thursday that a monthly version would be published from Sept. 1. The first release will cover data for the month of July.

Economists welcomed the move which they said would give them access to figures that have been presented informally to Monetary Policy Committee members at their monthly policy meeting each month.

"These figures are going to be crucial to monitoring the success of quantitative easing," said Brian Hilliard, chief UK economist at Societe Generale. "The BoE knows it needs to have this information so it makes sense to give it to the markets as well."

Analysis of money trends has moved into the spotlight after Britain's central bank began buying assets with newly-created month to support Britain's credit-starved economy.

The BoE has bought more than 60 billion pounds of assets since March and plans to raise that total to 125 billion pounds by the start of August. It has the leeway to raise it to 150 billion pounds should it see fit, or even higher with government approval.

Bank policymakers consider "M4 excluding intermediate other financial corporates" as the best gauge of money growth in the economy since it strips out flows that are internal to the financial sector.

Other measures of the money supply have been inflated by a shift from unsecured to secured borrowing in the wake of the credit crisis.

(Reporting by Christina Fincher; editing by David Stamp)

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