How Central Banks Use the Money Supply Curve

In this episode of Monetary Policy Explained, Lucas and Luna dig into the money supply curve: what it is, why central banks care about it, and how it shapes policy decisions. Using the real-world example of the ECB's October 2025 recalibration of its liquidity operations, they explain the difference between the vertical and upward-sloping views of the money supply curve and what recent balance-sheet runoff data tells us about which model central banks actually follow. Listeners will learn how the money supply curve helps predict whether a rate hike or quantitative tightening will have a bigger impact on inflation — and why the Fed and ECB are now paying closer attention to the slope of that curve as they navigate the post-pandemic liquidity landscape. #MoneySupplyCurve #CentralBanks #ECB #FederalReserve #MonetaryPolicy #Liquidity #QuantitativeTightening #BalanceSheetRunoff #ReserveSupply #InterestRatePolicy #Economics #FexingoBusiness #BusinessPodcast #LucasAndLuna #MonetaryEconomics #CentralBankToolkit #MoneyMarkets #PolicyTransmission Keep every episode free: buymeacoffee.com/fexingo