Central banks have only limited control over the domestic interest rate, despite it being a core policy lever that most use to set monetary policy, new research finds.

In Riders on the storm, Òscar Jordà and Alan Taylor say central banks are forced to navigate through the economy’s “stormy waters”, and must pay attention to “local currents” as well as “underlying, yet powerful, global disturbances”.

They set out to empirically examine how factors outside central banks’ control affect interest