Markets and operations

Quarterly Bulletin 2001 Q4
Published on 01 December 2001

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.

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