Australia’s money supply & credit growth in April 2008

July 10th, 2008

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Continuing from Australia?s money supply growth in March 2008, we will report on the growth of Australia?s money supply for April 2008. In that month, Australia?s broad and M3 money supply has reach yet another record high of AU$1089.4 billion and AU$1003 billion respectively (see What is money? on the explanations of the various measures of money). Between April 2007 and April 2008 (i.e. the year-to-date), Australia?s M3 money grew by 20.4%. The year-to-date growth for March 2008 and February 2008 was 21.1% and 21.6% respectively. No doubt, Australia’s money supply is still growing to record highs. But there seem to be some tentative indications that the growth is slowing since January 2008.

Credit growth is also exhibiting the same behaviour. While total credit reaches a record high of AU$1826.9 billion in April 2008, its year-to-date growth was slowing since January 2008.

The data for May and June 2008 is not out yet. If we see a sustained deceleration in both money supply and credit growth, this will mean that Australia is moving towards deflation, which is very bad for asset prices.

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