Monetary policy spillovers, global commodity prices and cooperation
By Massimo Ferrari ; Andrew Filardo ; Marco Lombardi ; Carlos Montoro
February 2018
Language: English
Keywords
- commodity prices
- global economy
- monetary policy
- spillovers
JEL Classification
- E52
- E61
Abstract
How do monetary policy spillovers complicate the trade-offs faced by central banks face when responding to commodity prices? This question takes on particular relevance when monetary authorities find it difficult to accurately diagnose the drivers of commodity prices. If monetary authorities misdiagnose commodity price swings as being driven primarily by external supply shocks when they are in fact driven by global demand shocks, this conventional wisdom – to look through the first-round effects of commodity price fluctuations – may no longer be sound policy advice.