Markets and Operations Winter 2004
This article reviews developments since the Autumn Quarterly Bulletin in sterling financial markets, UK market structure and the Bank's official operations. Short-term nominal interest rates fell, reflecting falls in both implied inflation expectations and real interest rates. In effective terms, sterling depreciated. Real interest rates also fell in other countries, notably in the euro area and the United States. This could be consistent with financial market participants having perceived weaker near-term global economic activity. However, UK (and global) equity prices increased over the review period. Some of this increase may have reflected lower real interest rates, but such a marked increase is difficult to reconcile with investors having perceived weaker economic activity and commodity price pressures having remained strong. Longer-term market-based measures of inflation expectations remained well anchored in line with the Monetary Policy Committee's target of 2.0% for CPI inflation. The Bank of England issued a second consultative paper on fundamental reform of its operations in the sterling money markets. The paper set out detailed proposals for the new framework
Year of publication: |
2006
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Authors: | Wells, Simon J. |
Publisher: |
[S.l.] : SSRN |
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