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mpc: 2 euro-area consumer confidence had moved up in April for the first time in seven months. Although there had been upward revisions to earlier quarters, GDP in France was estimated to have fallen in 2002 Q4, which reinforced the view that the slowdown in the euro area at the end of 2002 was more marked than previously thought. The April Consensus forecast for euro-area GDP growth in 2003 had fallen to 1%, from 1.3% in February. Moreover, the recent further rise in the euro could be expected to weaken the contribution of net trade to aggregate demand growth. The appreciation could provide some short-term offsetting support to consumption, through an improvement in the terms of trade, lower inflation, and possibly lower interest rates than would otherwise have prevailed. 5 In Japan, the all-activity index for 2002 Q4 had been revised up, which was consistent with the GDP data for that quarter. Retail sales and household spending growth had increased in 2003 Q1, although the latter was still negative. But industrial production had fallen in March, and the annual rate of growth of exports had weakened. Equity prices in Japan had not risen by as much as in other major markets, perhaps reflecting longer-term structural problems in the Japanese economy. The SARS epidemic was likely to depress activity temporarily in a number of other Asian countries. 6 The recent appreciation of the euro against the dollar had perhaps been surprising, given that growth prospects for the euro area seemed to have worsened relative to the United States, and that there might now be less uncertainty affecting the dollar associated with the situation in Iraq. The Committee noted that the previous persistent strength of the dollar and the weakness of the euro had also been difficult to explain, and that its reversal should help to address the current account imbalances in the international economy, but changes in relative domestic demand would probably be needed as well. 7 The Wilshire index had increased by around 8% since the Committee's April meeting, and although the rise in the Eurostoxx index had been less than 5%, German equities had risen by almost 10%. The FTSE All-Share index had risen by over 4%. In addition to the reduction in uncertainty following the war in Iraq, global equity prices had probably been helped by corporate earnings reports from the United States in the first quarter being better than expected. Because the firms quoted in the major equity price indices typically sell their products, and own assets, in foreign markets as well as their home market, any perceived improvement in one major international market tends to raise equity prices in all the major centres.