This combines with the perception that central banks may have lost their leverage on longer-term interest rates (see the discussion on the “saving glut”), as is evident from a lower impact of short-term interest rates on the yield curve, a higher correlation of interest rates across countries and a flattening of the Phillips curve caused by globalisation.
In this new global environment, it is argued by some, domestic monetary policies can do little in isolation; the only possibility is to join forces. I will structure my remarks on this issue along a few questions. First, does globalisation (increased trade and financial integration) necessarily reduce the effectiveness of monetary policy? •  Here, I think worries are probably exaggerated.