The recent decline in the money supply comes as the Fed has been aggressively raising rates to push inflation back to its 2% target. That dynamic changed in the last two years, though, with money supply trends moving in roughly the same direction as inflation pressures: As money supply rose rapidly into early 2022, so did inflation; since M2 started a persistent decline last summer, inflation pressures have also receded. To be sure, measuring money supply is complicated, with no one way to do it. Bullard, acknowledging the cooling off of money supply, said this downshift in money "bodes well for disinflation," which means the Fed is likely to face an enduring trend of lower price pressures. Economists, meanwhile, are still taking on board whether money supply is something they need to pay greater mind to as they contemplate monetary policy and inflation.

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