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mpc: 3 Short-term market interest rate expectations, as measured by the December 2005 short sterling contract, had fallen in the United Kingdom by around 30 basis points since the previous meeting. The fall over the past month in the United Kingdom had been larger than in the United States and in the euro area. The decline in UK short-term market interest rate expectations since earlier in the year was even more substantial. The markets now appeared to be pricing in a reduction in the official repo rate in the second half of the year ­ although no change in interest rates was expected at this meeting. The magnitude of the fall in short-term market interest rates in the United Kingdom seemed a little surprising in the light of the mixed data. The weaker view on UK interest rates that had been priced into the short end of the yield curve was not shared by all commentators. All 45 of the economists surveyed by Reuters had expected no change in official interest rates this month, and their mean expectation for the end of 2005, though down on the month, implied no change in the repo rate. There had been some increase in measures of uncertainty ­ as measured by implied volatility on short sterling options contracts ­ but this increase had not been particularly large by recent historical standards.