This article reviews developments in international and domestic financial markets and describes Bank of England market operations in the period 30 September 1999 to 14 January 2000.
- The century date change passed with minimal disturbance to markets. Financial market turnover was generally low in December and corporate bond issuance fell, but activity rapidly returned to normal levels in early January.
- Official interest rates were raised in both the euro area and the United States in November, by 50 and 25 basis points respectively. During the period, yield curves in the euro area and the United States shifted upwards, largely in response to stronger-than-expected economic growth and in anticipation of further monetary policy tightening.
- Short-term market interest rates also rose in the United Kingdom, partly reflecting the MPC’s decisions to raise the Bank’s repo rate by 25 basis points in November and January. But long gilt yields fell, further accentuating the inversion of the gilt yield curve.
- Equity markets in all the major economies rose strongly during the period.
- The euro depreciated further against the other major currencies, despite higher market interest rates.