The Coming U.S. Interest Rate Tightening Cycle : Smooth Sailing or Stormy Waters?
Since the global financial crisis, the exceptionally accommodative monetary policy stance of the U.S. Federal Reserve (Fed) has helped support activity, bolstered asset valuations, and reduced risk premia. In addition, it has been instrumental in boosting capital flows to emerging and frontier marke...
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World Bank, Washington, DC
2015
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| Online Access: | http://hdl.handle.net/10986/22629 |
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okr-10986-226292021-04-23T14:04:10Z The Coming U.S. Interest Rate Tightening Cycle : Smooth Sailing or Stormy Waters? Arteta, Carlos Kose, M. Ayhan Ohnsorge, Franziska Stocker, Marc long-term yields growth prospects economic fundamentals Dollar strength interest rates business cycle monetary policy macroprudential policy international policy coordination tightening cycle Since the global financial crisis, the exceptionally accommodative monetary policy stance of the U.S. Federal Reserve (Fed) has helped support activity, bolstered asset valuations, and reduced risk premia. In addition, it has been instrumental in boosting capital flows to emerging and frontier market economies (EFEs). As the U.S. economy improves, the Fed is expected to start raising policy interest rates in the near term (an event widely referred to as “liftoff”) and thus commence a tightening cycle for the first time in nearly a decade. The mid-2013 “taper tantrum” episode is a painful reminder that even a long-anticipated change in Fed policies can surprise markets in its specifics, and lead to significant financial market volatility and disruptive movements in capital flows to EFEs. Recent debates have focused on the potential impact of the liftoff on EFEs, but there are also significant risks associated with the pace of subsequent rate increases, which is currently expected to be very gradual, but could accelerate at a time when EFE policy buffers are eroding. This Policy Research Note presents a comprehensive analysis of the changes in global conditions since the taper tantrum, risks of disruptions during the upcoming Fed tightening cycle, potential implications for EFEs, and policy options. 2015-09-15T15:22:06Z 2015-09-15T15:22:06Z 2015-09-15 Working Paper http://hdl.handle.net/10986/22629 en_US Policy Research Note; CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Working Paper |
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Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
en_US |
| topic |
long-term yields growth prospects economic fundamentals Dollar strength interest rates business cycle monetary policy macroprudential policy international policy coordination tightening cycle |
| spellingShingle |
long-term yields growth prospects economic fundamentals Dollar strength interest rates business cycle monetary policy macroprudential policy international policy coordination tightening cycle Arteta, Carlos Kose, M. Ayhan Ohnsorge, Franziska Stocker, Marc The Coming U.S. Interest Rate Tightening Cycle : Smooth Sailing or Stormy Waters? |
| relation |
Policy Research Note; |
| description |
Since the global financial crisis, the exceptionally accommodative monetary policy stance of the U.S. Federal Reserve (Fed) has helped support activity, bolstered asset valuations, and reduced risk premia. In addition, it has been instrumental in boosting capital flows to emerging and frontier market economies (EFEs). As the U.S. economy improves, the Fed is expected to start raising policy interest rates in the near term (an event widely referred to as “liftoff”) and thus commence a tightening cycle for the first time in nearly a decade. The mid-2013 “taper tantrum” episode is a painful reminder that even a long-anticipated change in Fed policies can surprise markets in its specifics, and lead to significant financial market volatility and disruptive movements in capital flows to EFEs. Recent debates have focused on the potential impact of the liftoff on EFEs, but there are also significant risks associated with the pace of subsequent rate increases, which is currently expected to be very gradual, but could accelerate at a time when EFE policy buffers are eroding.
This Policy Research Note presents a comprehensive analysis of the changes in global conditions since the taper tantrum, risks of disruptions during the upcoming Fed tightening cycle, potential implications for EFEs, and policy options. |
| format |
Working Paper |
| author |
Arteta, Carlos Kose, M. Ayhan Ohnsorge, Franziska Stocker, Marc |
| author_facet |
Arteta, Carlos Kose, M. Ayhan Ohnsorge, Franziska Stocker, Marc |
| author_sort |
Arteta, Carlos |
| title |
The Coming U.S. Interest Rate Tightening Cycle : Smooth Sailing or Stormy Waters? |
| title_short |
The Coming U.S. Interest Rate Tightening Cycle : Smooth Sailing or Stormy Waters? |
| title_full |
The Coming U.S. Interest Rate Tightening Cycle : Smooth Sailing or Stormy Waters? |
| title_fullStr |
The Coming U.S. Interest Rate Tightening Cycle : Smooth Sailing or Stormy Waters? |
| title_full_unstemmed |
The Coming U.S. Interest Rate Tightening Cycle : Smooth Sailing or Stormy Waters? |
| title_sort |
coming u.s. interest rate tightening cycle : smooth sailing or stormy waters? |
| publisher |
World Bank, Washington, DC |
| publishDate |
2015 |
| url |
http://hdl.handle.net/10986/22629 |
| _version_ |
1764451612463464448 |