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mpc: 4 of financial assets had remained below the 1990s average. So it was unlikely that the recent strength in ICPFs' deposits had wider implications for asset prices. A15 Nominal interest rates had fallen significantly, particularly at shorter maturities. This had been consistent with the emergence of a market view that rates were at their peak. Longer-term nominal interest rates had also fallen on the month. Corporate bond rates had changed little on the month, implying a rise in spreads over swap rates. Corporate bond issuance had fallen back in October, following a strong September when demand and issuance may have been boosted by speculation about changes to the Minimum Funding Requirement. A16 Quoted retail rates data had indicated a fall in two-year fixed secured rates in October, and to a lesser extent in two-year discounted variable rates. But unsecured rates, particularly on personal loans, had picked up on the month. Since the last repo rate change in February, swap rates had eased significantly, which had facilitated lower rates on fixed-rate loans. Even so, there had been anecdotal evidence of a substantial shift by borrowers towards discounted and variable rates and away from fixed- rate borrowing. A17 Survey-based measures of inflation expectations had changed little on the month. Inflation expectations derived from index-linked gilts had fallen slightly. A18 The FTSE All-Share index had risen by around 2.1% since the October MPC meeting. Over the month, UK equity price movements had been rather volatile, a pattern that had been observed in other international equity markets. A19 The sterling effective exchange rate index had depreciated by 0.9% to 107.0 since the October MPC meeting to a level 1.0% above the August Inflation Report central forecast. Over the month, sterling had weakened against the dollar and the yen, but appreciated against the euro. Consensus long- term forecasts of the sterling-dollar and sterling-euro exchange rates had both risen since June's survey.

III

Demand and output

A20 The Office for National Statistics' preliminary estimate of GDP growth in 2000 Q3 had shown growth easing to 0.7% from 0.9% in Q2. Service sector output had grown by 0.7% in Q3, to 3.3%