The period of unprecedented macroeconomic policy in the United States and the euro zone is entering a new phase. The global financial crisis sparked an aggressive, and highly experimental, period in US monetary policy that saw the federal funds rate hit the zero lower bound, where it still remains, while the Federal Reserve’s balance sheet expanded by over US$3.5 trillion. Several other central banks have followed in the Fed’s footsteps and more are waiting in the wings, if deemed necessary. The end of these policies is now in sight. The Fed has already ceased outright asset purchases, effectively stabilizing its balance sheet. More recently, the Federal Open Markets Committee — the Fed’s monetary policy committee — has changed its forward guidanc. Drawing on CIGI-sponsored research, this policy brief discusses the potential effects of unexpected US news events on global capital flows. It then identifies the countries that are most vulnerable to global financial volatility and discusses the role of the Group of Twenty in facilitating a stronger and more resilient global economy.

  • Domenico Lombardi

    Domenico Lombardi is the former director of the Global Economy Program and a former member of the executive management committee at the Centre for International Governance Innovation (CIGI). He serves on the advisory boards of the Peterson Institute for International Economics and the Bretton Woods Committee in Washington, and is a member of the Steering Committee of the Asian Economic Panel.

  • Pierre Siklos

    Pierre Siklos is a CIGI senior fellow. His research interests include applied time series analysis and monetary policy, with a focus on inflation and financial markets. Pierre is a research associate at Australian National University’s Centre for Macroeconomic Analysis and a senior fellow at the Rimini Centre for Economic Analysis.

  • Samantha St. Amand

    Samantha St. Amand is a CIGI senior research associate in the Global Economy Program. She has a B.A. (honours) in economics from Wilfrid Laurier University and an M.A. in economics from the University of Waterloo. Samantha previously worked as a research assistant at the Viessmann European Research Centre in Waterloo.