The Coming U.S. Interest Rate Tightening Cycle: Smooth Sailing or Stormy Waters? Arteta, Carlos Kose, M. Ayhan Ohnsorge, Franziska Stocker, Marc 2015-09-15T15:22:06Z 2015-09-15T15:22:06Z 2015-09-15
dc.description.abstract 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. en
dc.language.iso en_US
dc.publisher World Bank, Washington, DC
dc.relation.ispartofseries Policy Research Note;
dc.rights CC BY 3.0 IGO
dc.rights.holder World Bank
dc.subject long-term yields
dc.subject growth prospects
dc.subject economic fundamentals
dc.subject Dollar strength
dc.subject interest rates
dc.subject business cycle
dc.subject monetary policy
dc.subject macroprudential policy
dc.subject international policy coordination
dc.subject tightening cycle
dc.title The Coming U.S. Interest Rate Tightening Cycle en
dc.title.subtitle Smooth Sailing or Stormy Waters? en
dc.type Working Paper en
dc.type Document de travail fr
dc.type Documento de trabajo es
dspace.entity.type Publication 2015-09-15
okr.doctype Publications & Research
okr.doctype Publications & Research :: Working Paper
okr.globalpractice Macroeconomics and Fiscal Management
okr.globalpractice Finance and Markets 100014
okr.language.supported en
okr.topic Finance and Financial Sector Development :: Currencies and Exchange Rates
okr.topic Macroeconomics and Economic Growth :: Business Cycles and Stabilization Policies
okr.topic Macroeconomics and Economic Growth :: Economic Forecasting
okr.topic Macroeconomics and Economic Growth :: Economic Growth
okr.topic Macroeconomics and Economic Growth :: Fiscal & Monetary Policy
okr.topic Macroeconomics and Economic Growth :: Inflation
okr.unit Office of the Chief Economist, Development Economics Vice Presidency (DECVP)
relation.isAuthorOfPublication ac9fefe8-9d4d-555d-bb68-f056fd7a3790
relation.isAuthorOfPublication 5807995a-9e0a-5d56-b622-d4d19e723613
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