Jerome H Powell: Monetary policy influences on global financial conditions and international capital flows

Speech by Mr Jerome H Powell, Chairman of the Board of Governors of the Federal Reserve System, at the "Challenges for Monetary Policy and the GFSN in an Evolving Global Economy" Eighth High-Level Conference on the International Monetary System, sponsored by the International Monetary Fund and Swiss National Bank, Zurich, 8 May 2018.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Thank you for inviting me to join you today as part of this distinguished panel.

Our subject is the relationship between "center country" monetary policy and global financial conditions, and the policy implications of that relationship both for the center country and for other countries affected. This broad topic has been the subject of a great deal of research and discussion in recent years. Today I will focus in particular on the role of U.S. monetary policy in driving global financial conditions and capital flows. To preview my conclusions, I will argue that, while global factors play an important role in influencing domestic financial conditions, the role of U.S. monetary policy is often exaggerated. And while financial globalization does pose some challenges for monetary policy, efforts to build stronger and more transparent policy frameworks and a more resilient financial system can reduce the adverse consequences of external shocks.