Publication:
The Coming U.S. Interest Rate Tightening Cycle: Smooth Sailing or Stormy Waters?

dc.contributor.authorArteta, Carlos
dc.contributor.authorKose, M. Ayhan
dc.contributor.authorOhnsorge, Franziska
dc.contributor.authorStocker, Marc
dc.date.accessioned2015-09-15T15:22:06Z
dc.date.available2015-09-15T15:22:06Z
dc.date.issued2015-09-15
dc.description.abstractSince 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.en
dc.identifier.doi10.1596/22629
dc.identifier.urihttps://hdl.handle.net/10986/22629
dc.language.isoen_US
dc.publisherWorld Bank, Washington, DC
dc.relation.ispartofseriesPolicy Research Note;
dc.rightsCC BY 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttp://creativecommons.org/licenses/by/3.0/igo
dc.subjectlong-term yields
dc.subjectgrowth prospects
dc.subjecteconomic fundamentals
dc.subjectDollar strength
dc.subjectinterest rates
dc.subjectbusiness cycle
dc.subjectmonetary policy
dc.subjectmacroprudential policy
dc.subjectinternational policy coordination
dc.subjecttightening cycle
dc.titleThe Coming U.S. Interest Rate Tightening Cycleen
dc.title.subtitleSmooth Sailing or Stormy Waters?en
dc.typeWorking Paperen
dc.typeDocument de travailfr
dc.typeDocumento de trabajoes
dspace.entity.typePublication
okr.date.disclosure2015-09-15
okr.date.doiregistration2025-05-05T12:35:34.122662Z
okr.doctypePublications & Research
okr.doctypePublications & Research::Working Paper
okr.externalurlhttp://www.worldbank.org/en/research/brief/policy-research-note-no2-the-coming-us-interest-rate-tightening-cycle-smooth-sailing-or-stormy-waters
okr.globalpracticeMacroeconomics and Fiscal Management
okr.globalpracticeFinance and Markets
okr.guid317051468188368385
okr.identifier.report100014
okr.language.supporteden
okr.topicFinance and Financial Sector Development::Currencies and Exchange Rates
okr.topicMacroeconomics and Economic Growth::Business Cycles and Stabilization Policies
okr.topicMacroeconomics and Economic Growth::Economic Forecasting
okr.topicMacroeconomics and Economic Growth::Economic Growth
okr.topicMacroeconomics and Economic Growth::Fiscal & Monetary Policy
okr.topicMacroeconomics and Economic Growth::Inflation
okr.unitOffice of the Chief Economist, Development Economics Vice Presidency (DECVP)
relation.isAuthorOfPublicationac9fefe8-9d4d-555d-bb68-f056fd7a3790
relation.isAuthorOfPublication5807995a-9e0a-5d56-b622-d4d19e723613
relation.isAuthorOfPublication.latestForDiscovery5807995a-9e0a-5d56-b622-d4d19e723613
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