In the current situation, the quantitative easing policy contributes to maintaining an accommodative financial environment by stabilizing market interest rates, thus allowing firms to continue to enjoy low funding costs. As for the conduct of monetary policy, the Bank will continue to maintain the quantitative easing policy based on the commitment mentioned earlier since the core CPI is still registering a slight year-on-year decline.
But what are the channels of transmission of these shocks to the United States? For concreteness, let us consider the case of a negative demand shock originating abroad, such as a foreign recession. First, this shock affects the United States through direct trade links, lowering demand for U.S. exports and, thus, lowering U.S. GDP.