Chart of the Week

In the US, inflation has remained muted even as M2 money supply – which broadly consists of cash and short-term deposits – hit record highs. This lack of inflation may stem in part from recent declines in the velocity of M2 – the rate at which money is exchanged – driven by higher excess savings and changes to the banking system. We expect inflation to remain contained, with Core PCE ending the year at 1.8%