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- Title
Markets and operations.
- Abstract
This article reviews developments since the Autumn Quarterly Bulletin in sterling markets, UK market structure and in the Bank's official operations.(1) • Short-term nominal sterling interest rates rose, reversing the falls in forward rates observed earlier in the year. This was part of a global upward revision to near-term interest rate expectations. • But long-term nominal and real sterling forward rates declined. Indeed, long real forward rates fell to historically low levels over the period, probably reflecting heightened UK pension fund demand for long-dated bonds. • UK equity indices ended the period higher, although they had fallen sharply in October before rebounding. Alongside robust earnings growth, announcements of takeover activity may have supported share prices over recent months and helped to sustain the upward trend in UK equity prices. • In effective terms, sterling depreciated, largely reflecting a fall in the value of sterling against the US dollar. Nonetheless, comparing movements over a longer window, the sterling ERI remained in a relatively narrow range.
- Subjects
FOREIGN exchange market; STOCK prices; INTEREST rates; FOREIGN exchange futures; PENSION trusts; STOCK price indexes; TENDER offers
- Publication
Bank of England Quarterly Bulletin, 2005, Vol 45, Issue 4, p407
- ISSN
0005-5166
- Publication type
Article