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.
BIS central bankers’ speeches  3  In this case, one cannot rule out interruption in normalization or even a return to greater stimulus in the United States. Second, continued orderly unwinding of lax monetary policy, including eventually smaller central bank balance sheets, could prove to be complicated.