In August 2007, interest rates in the unsecured money market started to rise significantly above the policy rates, also for very short-term maturities. Indicators of financial market liquidity, in a number of markets, declined dramatically. Since August 2007, the ECB has launched a series of market operations aimed to address pressures in the money market, to ensure that very short-term money market rates remain close to the ECB’s policy rates and thus to contain spill-over effects to the financial system and the real economy. These operations have succeeding in stabilising the very short-term interbank rate and reduced tensions in the long-term money market. Because money market pressures had remained at elevated levels globally until December [Chart 17], a global response was called for, in the form of a joint action of major central banks in the advanced economies, including the ECB, to provide US dollar liquidity to financial institutions also outside the US. Overall, the central bank operations have had a positive impact on money markets worldwide and contributed to mitigating the effects of the turmoil on the financial system and the economy. However, persisting uncertainty in financial markets – which these actions cannot address, and were not intended to address – imply that pressures in the longer-term money market remain, although at significantly reduced level since December 2007. The European Central Bank continues to stand ready to act in a swift and decisive manner in order to ensure the orderly functioning of money markets.]

Bank of France reports industrial output continued to increase in all sectors in February 1997 BANK OF FRANCE, MONTHLY BUSINESS SURVEY, 17/3/97. In February, according to the business leaders surveyed by the Banque de France, industrial output continued to increase in all sectors. The capacity utilization rate rose slightly. Overall demand grew at a moderate pace. There was strong demand from foreign markets, particularly from northern Europe, including Germany and the United Kingdom, and from the United States and Asia. The rise in the dollar and in sterling reinforced the competitiveness of French products. Growth in demand on the domestic market was much more moderate. Order books are deemed to be satisfactory in all sectors, with the exception of the food-processing industry, where they declined slightly and appear to be insufficient. Inventories of finished products are still somewhat above normal levels. In particular, they are considered to be above desired levels in the food-processing, intermediate goods and automobile sectors. In the coming months activity should continue to increase in all sectors, with the exception of the automobile sector. Commodity prices were stable overall. However, price rises were recorded in certain parts of the intermediate goods industry, such as the rubber and plastics, metal-working, and wood-processing sectors, and in the food processing industry owing to the appreciation of the dollar. Intense competition prevented these increases from being passed on to sales prices, which scarcely changed, except in the automobile sector, where they declined. The business leaders surveyed continued to be cautious in their investment plans.