WASHINGTON, Jan. 9 (Xinhua) -- Data released by the U.S. Federal Reserve (Fed) on Thursday showed that its M2 money stock increased slightly for the week ending Dec. 30, 2019.
M2, the broad money supply, rose to 15.4279 trillion U.S. dollars from the previous week's 15.4244 trillion dollars, while M1, the narrow money supply, decreased from 4.0346 trillion dollars to 3.9843 trillion dollars in the same period.
M1 is commonly known as a measure of money supply, which includes cash and checking deposits. M2, the most critical indicator of money supply and inflation, includes all elements of M1 as well as savings deposits, money market securities, mutual funds, and other time deposits.
In September 2019, a quick surge of money demand emerged in the U.S. money market, sending the interest rates in the U.S. money markets to nearly 10 percent.
The Fed had been pumping money into the market since September by providing repurchase agreements and buying securities in order to calm the market, commonly known as "repo operations." According to the Fed, the central bank will not stop these actions until January 2020.
Richard Clarida, vice chairman of the Fed, said on Thursday in New York City that "we stand ready to adjust the details" of repo operations while keeping the interest rate steady in the U.S. financial market.
However, the Fed official mentioned that the central bank was prepared to carry on repo operations if the money shortage would strike back during the tax payment period in April.
"It may be appropriate to gradually transition away from active repo operations this year as Treasury bill purchases supply a larger base of reserves," said Clarida, "though some repo might be needed at least through April, when tax payments will sharply reduce reserve levels."