Nonetheless, various academic studies suggest that unconventional tools, via their effect on term premiums, may have depressed 10-year US yields by as much as 50 to 100 basis points.1 As for capital flows to emerging markets, it may be no surprise that the era of very accommodative policy in the developed world coincided (according to data of the Institute of International Finance) with inflows in excess of $ 1 trillion per year from 2010 to 2014, a level that had only been exceeded once before the global financial crisis.2 This backdrop, however is likely to change soon.
The Fed’s FOMC has, of late, repeatedly expressed its confidence in meeting its dual target of full employment and a return of inflation towards its targeted levels.