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mpc: 5 A range of possible explanations for the strength of sterling was discussed. One was that market participants had revised their assessment of the equilibrium real sterling exchange rate, interpreting the recent data on UK demand (with consumption growth, in particular, stronger than previously thought) as reflecting a permanent strengthening relative to other countries. But it was not clear what might have triggered that reassessment. Another was that there might have been changes in expected inflation, either in the United Kingdom or abroad. But there was little evidence for that proposition. A further possibility was that portfolio flows from dollars into sterling, associated with changes in the risk premium on sterling-denominated assets, may have represented efforts by investors ­ including some Asian central banks ­ to diversify their portfolios.