An interest rate increase by the Federal Reserve could create greater global repercussions than in the past as the economy has changed and central banks hold little experience inching away from interest rates of zero.
According to European Central Bank Vice President Vitor Constancio, a rate hike would have a larger impact as emerging markets, specifically China, are now incorporated in the global economy to an unprecedented degree.
He added countries are more interconnected in production, cross-border flows have escalated, and forward guidance has become a vital part of a monetary policy.
Speaking in Hong Kong, the ECB official mentioned although diverging monetary policies show differences in fundamental in the eurozone and the United States, the conventional view is it should not generate no problems.
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