Impact on the real sector Readjustment of the currencies would also have implications for the real sector. Significant readjustment of the currencies and rise in interest rates could slow down the global growth. This would entail a reduction in export opportunities and reduction in investment demand for EMEs, in general, many of which depend on export demand to sustain their growth.
The first can be thought of as a mechanical attempt to implement my definition - the level of the real federal funds rate that, if allowed to prevail for a couple of years, would place economic activity at its potential - in models of the U.S. economy.