The year started strongly, with the rapid growth in equity markets that started in December continuing into January. This enthusiasm didn’t last and a sharp sell off at the start of February, blamed in part on computer trading and some dodgy derivatives, erased most of these gains. Following this the Bank of England kept interest rates on hold but signalled a faster rate of tightening in the coming months in response to stubbornly high inflation. While it has remained above target, the headline rate fell from 3 per cent in January to 2.7 per cent in February. To end the quarter, the UK and EU finally agreed a 21-month Brexit transition deal, which has provided some assurance that a cliff-edge Brexit will be avoided next year.
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