Monetary Base Grows at Slower Rate in February

Changes in the monetary base, or money supply, have a significant impact on capital equipment sales. In February 2014, the monetary base was $3.852 trillion dollars. That is 34.6% more than it was in February 2013. This is the third straight month that the month-over-month rate of change has declined. The annual rate of change, 28.1%, increased to its fastest rate of growth since February 2012. With the monthly and quarterly growth rates still so strong, the annual rate of change should continue to accelerate for the next quarter or two.

In December 2013 and January, the first two months of the Fed's tapering of QE, the monetary base only grew by $31 and $13 billion, respectively. This was significantly lower than the average monthly growth of the monetary base in 2013. However, in February, the monetary base increased $102 billion, which is close to the average monthly increase in 2013 and much more than Fed's stated tapered amount of $65 billion. So, has the Fed already given up on its taper due to the stock market dip in January?

To see some other charts related to the monetary base and debt levels, go to our monetary page.