First, incipient monetary divergence could butt up against domestic or external limits. For example, the Fed could decide that dollar appreciation or deterioration of international conditions could detain U.S. economic recovery. 2  For the estimation of Taylor rules, see BIS (2015). “85th Annual Report, 1 April 2014–31 March 2015,” June, p. 92.
Second, because the relative price of imports rises by less and the price of U.S. exports in foreign markets also falls by less under the low pass-through specification, there are somewhat smaller effects on net exports and, hence, on real output. Third, there is a smaller degree of "indirect" pressure on domestic inflation because of the smaller output response.