The review period saw an improvement in the growth prospects of some developed economies with an associated rise in financial market prices. The relatively strong outlook for the United Kingdom also led to an increase in sterling short-term interest rates. Idiosyncratic risks in emerging market economies resulted in a bout of turbulence during the review period. In the February Inflation Report the Bank’s Monetary Policy Committee (MPC) provided further guidance on the likely path of its policy once the unemployment threshold of 7% was reached. The MPC judged that there was scope for the UK economy to recover further before Bank Rate was raised and, even when Bank Rate did rise, it was expected to do so only gradually and to a level materially below its pre-crisis average of 5%. The year end saw some volatility in money markets internationally. This included sharp falls in UK overnight interest rates.