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mpc: 4 A13 Quoted retail rates data suggested that the November rate rise had been fully passed through to time deposit rates, but only partially passed through to sight deposit rates. The November rate rise had now been fully passed through to standard variable mortgage rates. The rate on new fixed rate mortgages had risen a little, despite falls in swap rates of the same maturity. A14 Implied forward inflation expectations had risen slightly, mainly reflecting the firming of nominal interest rates. Changes in survey-based measures of inflation expectations had been, overall, quite mixed over the month, but had shown a small increase in the general public's inflation expectations over the next two years. A15 Over the month UK equity prices had exhibited volatility, rising before year-end and subsequently falling back. A similar pattern had been observed in other international equity markets. The FTSE All-Share index had been broadly unchanged since the December MPC meeting, but it had been 7.5% above the November Inflation Report level. A16 The sterling effective exchange rate index had appreciated by 1.3% on the month, and had been 2.6% above the November Inflation Report central projection. Over the month, there had been little change in sterling against the euro, but sterling had appreciated against the dollar and yen. Monetary news had not appeared to explain much of these movements, since global interest rate expectations had for the most part risen in parallel.

III

Demand and output

A17 Quarterly GDP growth at constant market prices had been revised down by 0.1 percentage points in the third quarter to 0.8%. Revisions to previous quarters had reduced growth in 1998 Q4, but stronger growth in the first half of 1999 had left the level of GDP in Q3 little changed. Domestic demand growth had been revised down by 0.2 percentage points to 0.5% in Q3. This had been partly offset by the contribution made by net trade, which had been revised up from 0.2 to 0.3 percentage points. GDP in Q3 had been 1.9% higher than the same quarter a year earlier, revised up from 1.8%. Revisions to previous quarters had changed the pattern of annual GDP growth slightly, leaving the trough in 1998 Q4 and 1999 Q1 shallower.