This article reviews developments in international and domestic financial markets, drawing on information from the Bank of England’s market contacts, and describes the Bank’s market operations in the period 1 August to 26 October 2001.
- The terrorist attacks in the United States on 11 September had only a temporary adverse effect on the functioning of financial markets.
- Official interest rates were reduced by 125 basis points in the United States, and by 75 basis points in the United Kingdom and the euro area, and short-term interest rate expectations fell sharply in all three regions.
- Long-term interest rates in the United States, the United Kingdom and the euro area fell over the period.
- Exchange rate movements among the major currencies were relatively small.
- Equity prices fell sharply, especially after the terrorist attacks in the United States, but partly recovered from late September onwards.
Markets and operations