Challenges for overseas economies  Action by the Federal Reserve to gradually reduce the size of its asset purchases is sensible for the U.S. economy since it is showing signs of recovery, and it would be a natural policy decision for the United States.
An ensuing rise in U.S. long-term interest rates, however, could trigger a rise in long-term rates in other countries, which would restrain their economic growth. In emerging economies, growth has been propelled in part by a large inflow of funds caused by the quantitative easing policy in the United States.