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Markets swayed by inflation and growth prospects
Changes in the anticipated monetary stance and in the economic outlook continued to shape financial markets in the review period.1 The interplay of shifting inflation dynamics and deteriorating growth gave rise to two phases. In the first, from mid-September to mid-October, inflation readings came in stronger than anticipated, pushing up expectations of policy rates in the near future. In the second, through November, lower than expected inflation and weakening economic activity led markets to reassess downward the extent of policy tightening ultimately needed to contain inflation. These developments kept asset price ... (full story)