Some economists are warning that surging money supply may exacerbate a rise in US inflation, which is already accelerating at its fastest rate in more than a decade.
Money supply – which measures outstanding currency and liquid assets –rose 12 per cent year-over-year in April, according to The Centre for Financial Stability's Divisia M4 index including Treasuries.
The measure has been running between 22 per cent and 31 per cent each month since April 2020, fueled by unprecedented economic stimulus from the Federal Reserve and US government. That compares with annual growth of around 3-7 per cent that was common from 2015 to early 2020.
“This money supply growth is just so much faster than anything we’ve seen,” said Desmond Lachman, resident fellow at the American Enterprise Institute. "It’s a reflection of a huge amount of pent-up demand in the economy ... it’s difficult for me to see how you don’t get inflation.”
This money supply growth is just so much faster than anything we've seen
Federal Reserve Chairman Jerome Powell on Wednesday said the Fed would adjust policy if inflation expectations moved too high, and the central bank shifted its first projected rate increase from 2024 to 2023.
So far, the growth in money supply has not been a large driver of inflation pressures, in large part because cash is being held by banks as deposits.
The Fed has also played down the link between money supply and inflation, and Mr Powell said in February that the money measures have not been important determinants of inflation "for a long time".
Indeed, the central bank’s bond purchases after the financial crisis failed to spark the inflation some expected, with the economy taking years to recover and money supply falling at that time.
This time around, however, banks are struggling with record deposits after the US government ramped up fiscal spending, while the Federal Reserve is buying unprecedented amounts of bonds.
The worry is that companies, investors and consumers will draw on their deposits and boost spending while banks increase lending as the economy reopens. Some economists worry that such a confluence of factors could cause demand to grow at a faster rate than economic output, pushing prices higher.
Money supply growth was a factor behind high inflation in the 1970s, as the government ran up fiscal deficits and the Fed adopted loose monetary policies in an effort to boost employment.
Bank reserves have risen to a record $3.89 trillion as of April and are expected to climb above $5tn this year as banks sell bonds to the central bank.
Meanwhile, commercial and industrial loans by commercial banks fell to $2.55tn in May from a record $3.04tn in March 2020, though they remain above the $2.36tn level of February 2020.
The Fed could be reluctant to raise rates as the Treasury grapples with record debt levels, even if inflation rises, said William Barnett, director at the Centre for Financial Stability.
But if rates on primary market loans increase without a corresponding rise in the rate paid on reserves it could lead to an “explosion of lending,” Mr Barnett said. "The risk to the economy is future inflation."
Mr Barnett believes many of the Fed's bond purchases will be permanent, effectively monetising the debt, as occurred in the Second World War when most of the Fed's bond purchases were not reversed.
The Fed has said it will eventually begin phasing out its bond purchases as the economy recovers, after which it would face a decision on whether to allow the overall size of its asset holdings to decline as the bonds in its holdings mature.
As it "normalised" policy beginning in 2014, the Fed at first reinvested maturing securities to keep its overall balance sheet constant, but then allowed the balance sheet to shrink.
This time around, the Fed is nowhere near developing a plan for actually shrinking its holdings.
Still, some worry that it may be too late to act when inflation is already surging.
Data last week showed that consumer prices in May registered the biggest annual increase in 13 years, gaining 5 per cent.
"The inflation spike might be a little bit more than the Fed gambled on, once inflationary expectations start to get embedded in the system," said Kim Rupert, a managing director at Action Economics.
The Sand Castle
Director: Matty Brown
Stars: Nadine Labaki, Ziad Bakri, Zain Al Rafeea, Riman Al Rafeea
Rating: 2.5/5
Company%20profile
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War
Director: Siddharth Anand
Cast: Hrithik Roshan, Tiger Shroff, Ashutosh Rana, Vaani Kapoor
Rating: Two out of five stars
THE%C2%A0SPECS
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THE%20SPECS
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THE%20SPECS
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The five pillars of Islam
Evacuations to France hit by controversy
- Over 500 Gazans have been evacuated to France since November 2023
- Evacuations were paused after a student already in France posted anti-Semitic content and was subsequently expelled to Qatar
- The Foreign Ministry launched a review to determine how authorities failed to detect the posts before her entry
- Artists and researchers fall under a programme called Pause that began in 2017
- It has benefited more than 700 people from 44 countries, including Syria, Turkey, Iran, and Sudan
- Since the start of the Gaza war, it has also included 45 Gazan beneficiaries
- Unlike students, they are allowed to bring their families to France
The Brutalist
Director: Brady Corbet
Stars: Adrien Brody, Felicity Jones, Guy Pearce, Joe Alwyn
Rating: 3.5/5
Banned items
Dubai Police has also issued a list of banned items at the ground on Sunday. These include:
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Political flags or banners
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Bikes, skateboards or scooters
PROFILE OF SWVL
Started: April 2017
Founders: Mostafa Kandil, Ahmed Sabbah and Mahmoud Nouh
Based: Cairo, Egypt
Sector: transport
Size: 450 employees
Investment: approximately $80 million
Investors include: Dubai’s Beco Capital, US’s Endeavor Catalyst, China’s MSA, Egypt’s Sawari Ventures, Sweden’s Vostok New Ventures, Property Finder CEO Michael Lahyani
Profile of Tarabut Gateway
Founder: Abdulla Almoayed
Based: UAE
Founded: 2017
Number of employees: 35
Sector: FinTech
Raised: $13 million
Backers: Berlin-based venture capital company Target Global, Kingsway, CE Ventures, Entrée Capital, Zamil Investment Group, Global Ventures, Almoayed Technologies and Mad’a Investment.
Gothia Cup 2025
4,872 matches
1,942 teams
116 pitches
76 nations
26 UAE teams
15 Lebanese teams
2 Kuwaiti teams
Museum of the Future in numbers
- 78 metres is the height of the museum
- 30,000 square metres is its total area
- 17,000 square metres is the length of the stainless steel facade
- 14 kilometres is the length of LED lights used on the facade
- 1,024 individual pieces make up the exterior
- 7 floors in all, with one for administrative offices
- 2,400 diagonally intersecting steel members frame the torus shape
- 100 species of trees and plants dot the gardens
- Dh145 is the price of a ticket
The Voice of Hind Rajab
Starring: Saja Kilani, Clara Khoury, Motaz Malhees
Director: Kaouther Ben Hania
Rating: 4/5
How to avoid crypto fraud
- Use unique usernames and passwords while enabling multi-factor authentication.
- Use an offline private key, a physical device that requires manual activation, whenever you access your wallet.
- Avoid suspicious social media ads promoting fraudulent schemes.
- Only invest in crypto projects that you fully understand.
- Critically assess whether a project’s promises or returns seem too good to be true.
- Only use reputable platforms that have a track record of strong regulatory compliance.
- Store funds in hardware wallets as opposed to online exchanges.
The story of Edge
Sheikh Mohamed bin Zayed, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the Armed Forces, established Edge in 2019.
It brought together 25 state-owned and independent companies specialising in weapons systems, cyber protection and electronic warfare.
Edge has an annual revenue of $5 billion and employs more than 12,000 people.
Some of the companies include Nimr, a maker of armoured vehicles, Caracal, which manufactures guns and ammunitions company, Lahab
The specs
Price, base: Dh228,000 / Dh232,000 (est)
Engine: 5.7-litre Hemi V8
Transmission: Eight-speed automatic
Power: 395hp @ 5,600rpm
Torque: 552Nm
Fuel economy, combined: 12.5L / 100km
Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
Company%20profile
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Profile
Company: Justmop.com
Date started: December 2015
Founders: Kerem Kuyucu and Cagatay Ozcan
Sector: Technology and home services
Based: Jumeirah Lake Towers, Dubai
Size: 55 employees and 100,000 cleaning requests a month
Funding: The company’s investors include Collective Spark, Faith Capital Holding, Oak Capital, VentureFriends, and 500 Startups.
How to apply for a drone permit
- Individuals must register on UAE Drone app or website using their UAE Pass
- Add all their personal details, including name, nationality, passport number, Emiratis ID, email and phone number
- Upload the training certificate from a centre accredited by the GCAA
- Submit their request
What are the regulations?
- Fly it within visual line of sight
- Never over populated areas
- Ensure maximum flying height of 400 feet (122 metres) above ground level is not crossed
- Users must avoid flying over restricted areas listed on the UAE Drone app
- Only fly the drone during the day, and never at night
- Should have a live feed of the drone flight
- Drones must weigh 5 kg or less
Stamp%20duty%20timeline
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Roll of honour: Who won what in 2018/19?
West Asia Premiership: Winners – Bahrain; Runners-up – Dubai Exiles
UAE Premiership: Winners – Abu Dhabi Harlequins; Runners-up – Jebel Ali Dragons
Dubai Rugby Sevens: Winners – Dubai Hurricanes; Runners-up – Abu Dhabi Harlequins
UAE Conference: Winners – Dubai Tigers; Runners-up – Al Ain Amblers
Result
UAE (S. Tagliabue 90 1') 1-2 Uzbekistan (Shokhruz Norkhonov 48', 86')
Gulf rugby
Who’s won what so far in 2018/19
Western Clubs Champions League: Bahrain
Dubai Rugby Sevens: Dubai Hurricanes
West Asia Premiership: Bahrain
What’s left
UAE Conference
March 22, play-offs:
Dubai Hurricanes II v Al Ain Amblers, Jebel Ali Dragons II v Dubai Tigers
March 29, final
UAE Premiership
March 22, play-offs:
Dubai Exiles v Jebel Ali Dragons, Abu Dhabi Harlequins v Dubai Hurricanes
March 29, final
Sholto Byrnes on Myanmar politics
Dengue%20fever%20symptoms
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Volvo ES90 Specs
Engine: Electric single motor (96kW), twin motor (106kW) and twin motor performance (106kW)
Power: 333hp, 449hp, 680hp
Torque: 480Nm, 670Nm, 870Nm
On sale: Later in 2025 or early 2026, depending on region
Price: Exact regional pricing TBA
