WASHINGTON, July 25 (Xinhua) -- Data released by the U.S. Federal Reserve (Fed) on Thursday showed that M2 money stock dropped for the week ending July 15, as market traders expect an interest rate cut in late July.
M2, the broad money supply, shrank to 14.8273 trillion U.S. dollars from the previous week's 14.8327 trillion dollars, while M1, the narrow money supply, rose from 3.8184 trillion dollars to 3.8442 trillion dollars in the same period.
Market traders now bet the Fed would lower the interest rate at its policy meeting on July 30-31, according to the Chicago Mercantile Exchange Group FedWatch tool. The probability of a 25-basis-point rate cut is close to 79 percent, while a 50-basis-point rate cut is close to 21 percent.
The central bank decided at its last meeting to maintain the target range for the federal funds rate at 2.25 percent to 2.5 percent.
According to the Fed, M2 money stock rose 5.8 percent during the thirteen weeks ending July 15 from the previous period ending April 15, while M1 increased 6.1 percent.
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.
