6 / 16  BIS central bankers' speeches  If prices in the services sector differ in terms of level, volatility and persistence compared with other sectors, this can be expected to affect aggregate inflation dynamics. The second channel relates to a transmission effect – that is, differences in how the economy reacts to monetary impulses from the central bank.
If services and manufacturing differ with respect to their nominal and real rigidities, or feature different interest and exchange rate sensitivities, then monetary policy will be transmitted differently through the economy. To put it simply, the investment-saving (IS) curve may have a different slope depending on the weight of services in the economy.