Fed's Price-Inflation Target Continues to Elude as Money-Supply Growth Accelerates

The Federal Reserve's preferred price-inflation measure, core PCE, rose to 3.7 percent in the most recent data from July, marking the 65th consecutive month above the Fed's 2 percent target.

Despite Kevin Warsh's claim as new Fed chairman that he will bring down inflation, money-supply growth continues to accelerate, reaching a 59-month high in July with an 8.62 percent year-over-year increase.

The total money supply has grown above $19.71 trillion and by $1.5 trillion over the past year, with month-to-month growth occurring in 11 of the last 12 months.

Historically, M2 growth rates have followed a similar course to TMS growth rates, but throughout much of 2025, M2 outpaced even TMS, and M2 money-supply totals are now rapidly increasing, reaching $23.1 trillion with a year-over-year growth rate of 5.42 percent.

The Fed's refusal to increase its target policy rate despite the PCE inflation measure showing no sign of coming close to the 2 percent target has contributed to this continued money-supply growth.