Fed Adds 4.7% M2 Growth to First Warsh Policy Report as Monetarism Returns
Updated
Updated · American Banker · Jul 10
Fed Adds 4.7% M2 Growth to First Warsh Policy Report as Monetarism Returns
3 articles · Updated · American Banker · Jul 10
Summary
The Fed’s first semiannual policy report under Chair Kevin Warsh added a new money-supply section, saying M2 averaged 4.7% higher in the first five months of 2026 than a year earlier.
The report framed that rise as a return to pre-pandemic growth, contrasting it with the decade’s earlier double-digit surges and later contraction, while saying money velocity has moved back near late-2019 levels.
That addition underscores Warsh’s long-stated view that money supply matters for inflation, a monetarist emphasis largely absent from recent Fed debates and policy reports.
The 77-page report otherwise largely followed recent formats, saying inflation remains above the 2% target, longer-term expectations are still anchored, and banks are well capitalized despite private-credit redemption and asset-quality concerns.
Warsh is set to defend the report and broader policy views before the House Financial Services Committee on Tuesday and the Senate Banking Committee on Wednesday.