Skip to main content

Exchange Rates and Monetary Policy

(PDF PDF icon)

Changes in the federal funds target rate affect economic activity through different channels or transmission mechanisms. Most people understand the interest rate transmission mechanism: Easier monetary policy encourages interest-sensitive spending by lowering short-term interest rates. Exchange rates offer another policy conduit.


Suggested citation: "Exchange Rates and Monetary Policy," Federal Reserve Bank of Cleveland, Economic Trends, no. 01-10, pp. 09, 10.01.2001.

Upcoming EventsSEE ALL