Over the past 13 weeks, M2 (a measure of the money supply) has increased at a 7.9 percent annual pace, more than triple the year-over-year pace that existed before the 13-week period began. Over the past 8 weeks, M2 has increased at a 10.2 percent pace. The sources of the growth include in particular strong growth in savings deposits and stabilization in monies held in money market funds.
The vast amount of excess reserves in the U.S. banking system is of course fuel for money supply growth, but the match has been miles away. Now the fuel is moving from tankers out at sea to land. If these data are to have any value in determining whether or not excess reserves are finally multiplying enough to influence the outlook on monetary policy, the data must be accompanied by indications of stability in bank lending.