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mpc: 5 Alongside the increase in bond yields, the strong growth in equity prices was puzzling at first sight. Since the publication of the February Inflation Report, UK and European indices had risen by around 4% and the S&P 500 by a little less. Compared with a year earlier, the FTSE All-Share index had risen by around 20%. It was possible that evidence of continued strong growth in the global economy had led market participants to be more confident about the prospects for corporate profits and hence equity prices. Rising equity prices might also have reflected a potentially transient impact from recent high levels of merger and acquisition activity and speculation about company buy-outs. Whatever the cause of the strong rise in equity prices, the implied price-to-earnings ratio was only a little above its average since 1990.