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mpc: 2 The main news in financial markets since the November meeting had been a depreciation in the effective exchange rate index (ERI) of the dollar, by around 2%. This had fallen quite abruptly in the middle of the month, but was perhaps best understood in a longer-term context. Over a number of years, the growing US current account deficit had been interpreted by many commentators as pointing towards a weaker dollar and the dollar ERI had depreciated by over 25% since its previous peak in early 2002. During 2006, an additional factor might have been the gradual downward shift in interest rate expectations relative to those in the other major economies: markets were now pricing in some 50 basis points of easing by the Federal Open Markets Committee during 2007. The most recent fluctuations in the dollar had been larger against European currencies, including the euro and sterling, than against other major currencies.