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mpc: 2 in private consumption, and reported stockbuilding. Industrial production had continued to grow strongly in Q4 and in January was 3.8% higher than a year earlier. Business and consumer confidence had reached the peak levels previously seen in 1998 and so had pointed to a continued strengthening of activity. M3 growth had increased by 6.2% in February, above the January rate of 5.2%. Euro-area PPI inflation had risen again in March. Consumer price inflation was 2.0% in February. As with the United States, energy effects had mainly accounted for the stronger PPI and headline CPI inflation. A5 The first estimate of Japanese GDP in Q4 had shown a decline of 1.4% on the previous quarter; private consumption had fallen by 1.6%. Investment, mainly non-residential, had contributed positively to growth in Q4. Rising corporate profits and orders had pointed to further investment growth. The March Tankan survey pointed to a slow recovery in output. Japanese workers' household expenditure had increased by 3.9% in the year to February, boosted by the extra day in February 2000, but nonetheless pointed to higher private consumption in Q1. Net trade had been supported by intra-Asian exports and this was also likely to be a strong component in Q1 growth. Exports had increased by 15% in the year to February while import growth had remained above 10%. In February, consumer prices had fallen by 0.6% compared with a year earlier, as the effects of the earlier appreciation of the yen continued to feed through.

II Monetary and financial conditions

A6 The twelve-month growth rate of notes and coin in March had remained strong at 8.4%, the same as in February. Bank staff noted that the velocity of narrow money had fallen in recent years, partly as the result of a gradual adjustment to lower nominal interest rates. A7 The stock of M4 had risen by £2.2 billion (0.3%) in February leaving the twelve-month growth rate at its historic low of 2.7%. The weak M4 figures had continued to be dominated by other financial corporations' (OFCs') deposits, but private non-financial corporations' (PNFCs') and households' deposits had also been weak in recent months. Aggregate M4 lending (excluding the effects of securitisations) had been stronger in February, rising by £7.5 billion (0.8%) compared with £3.9 billion in January. The twelve-month rate had risen by 0.3 percentage points and remained robust at 8.9%.