Monetary policy transmits globally through exports/imports (via exchange rates), capital flows (via interest rate differentials), and a tendency for small open economies to follow large economies' rates — e.g. if the US cuts rates and Sweden's Riksbank does not, the Swedish currency appreciates, pressuring it to follow.
causalpending
Speaker
John TaylorEvidence Quote
“the tendency for central banks to follow each other and if the US has a low interest rate it will tend to mean that small open economies British for example or the Swedish will have lower and lower interest rates too and they do that to some extent because they're worried about their exchange rate”
Created: 6/15/2026, 9:20:12 AM
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