The first increase in the US federal funds rate since the start of the financial crisis proceeded smoothly, with the move having been well communicated in advance by the Federal Reserve and widely anticipated by investors.
There was a material deterioration in sentiment across asset markets at the start of the year, prompted by a combination of factors, including concerns about global growth.
Developed-country interest rates across short and long tenors fell as a result, and there was a sharp decline in the prices of a range of risky assets. Much of the decline in interest rates persisted, despite a stabilisation in sentiment.
The sterling ERI fell by 7.5% over the review period. In part the depreciation reflected changes in relative interest rates. Contacts also attributed a portion of it to uncertainty ahead of the referendum on UK membership of the European Union.