Eseandre Mordi
⬤ The UK's latest inflation reading landed at 3.03% year-over-year, coming in below expectations. As Steve Hanke noted, the number fits the current monetary picture: M4ex money supply is growing at 4.58% per year, which is still short of Hanke's Golden Growth Rate of 5.66% -- the level he ties to a stable 2% inflation target. That gap between actual money growth and the benchmark is exactly what makes this reading worth paying attention to.
⬤ The accompanying chart, "The UK's Annual Money Supply Growth," tells the story visually. M4ex surged into double digits during 2020-2021, then collapsed below zero in 2023, and has been climbing back since. As of December 2025, it sits at 4.58%/yr -- still below the 5.66% Golden Growth Rate line drawn on the chart. The message is pretty clear: money supply growth remains subdued, and that's consistent with inflation cooling rather than picking back up.
M4ex money supply is growing at 4.58%/yr, below Hanke's Golden Growth Rate of 5.66%/yr.
⬤ This fits a broader trend that's been building for months. UK inflation hits 3.0% CPI, lowest since March 2025 -- that coverage points to the same cooling trajectory. Different angle, same direction: UK price pressures are easing, and markets are watching closely for what it means for the Bank of England's next moves.
⬤ With M4ex at 4.58%/yr and the Golden Growth Rate at 5.66%/yr, the money supply signal is still below where it would ideally be for a balanced 2% inflation environment. Whether M4ex continues drifting toward that benchmark -- or stalls out -- will matter a lot for how CPI behaves from here. For a wider view, UK Inflation Drops to 3.6% as Price Pressures Finally Cool adds useful context on the cooling trend, and the global picture gets even more interesting in Global M1 Surges $25 Trillion Since 2020 as China Takes Over One-Third.
Eseandre Mordi
