Rate-setters do not take sufficient account of the effects of other countries’ monetary policy, research published by the Federal Reserve Bank of Minneapolis argues.

Monetary policy has an effect on the world real rate, say Javier Bianchi and Louphou Coulibaly in their paper Financial integration and monetary policy co-ordination. “Through this channel, a central bank’s policy affects the ability of other central banks to achieve their output and inflation stability objectives,” they write. 

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