ECB monetary policy spills over to US – Chicago Fed study
Resulting appreciation of dollar causes US leveraged loan investors to demand more compensation
European monetary policy spills over into the US through changes in the relative value of the dollar, according to research published this month by the Federal Reserve Bank of Chicago.
The study says that in response to a strengthening of the dollar following a policy announcement by the European Central Bank, investors in US leveraged loans require higher levels of compensation for the risks involved in holding such instruments. These costs are then passed on to US firms through higher costs of
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