In response to such a rapid rise in interest rates, the Bank provided ample funds to the market in an effort to stabilize interest rates through various operations including the new bond-borrowing (“repo”) operations introduced in late November.
This is partly why the financial system has recently proved resilient to volatility, and why contagion across countries and markets has remained limited. But these developments need to be put into the context of the continuing search for yield in the markets, rising trade protectionism, and political and policy uncertainty, which increase risks to financial stability.