Financial conditions have tightened rapidly over the past month

Financial conditions have tightened rapidly over the past month. The Bank of England raised its key policy rate to 4.5% early in May, but later in the month, gilt yields ticked up sharply and equity prices slipped as higher-than-anticipated inflation data spooked investors. Meanwhile, global financial conditions have remained volatile as investors reacted to the news-flow on US debt-limit talks and another regional US bank fell victim to the sharp rise in US interest rates.

Having stabilised during April, finan