Steven Kamin on the Global Influence of Fed Policy and the U.S. Dollar
Macro Musings with David Beckworth
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The Emerging Markets' Response to Higher Inflation
World Bank used its vector structural VAR to decompose movements in U.S. Treasury yields over the last couple of years. It found that increases in yields during 2022 have been mainly motivated by monetary shocks and in particular by shocks to the Fed reaction function. And basically reflecting a hawkish shift in Fed policy. Now, I'm not sure that the Fed actually became more hawkish in 2022 than in the previous year,. But the VAR interpreted the fact that inflation rose in 2021 and the Fed did nothing as indicating the Fed was actually dovish.
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