Abstract
The monetary policy of the Federal Reserve, especially changes in interest rates, has a significant impact on international capital flows and the macroeconomic stability of emerging market nations. This study examines the intricate processes by which changes in the Federal Reserve's monetary policy, such as increases or decreases in interest rates, have a major knock-on effect on the world's financial markets. Changes in capital flows, exchange rates, and financial circumstances are some of these factors that affect emerging economies' import and export operations. Through an analysis of the connection between trade dynamics and U.S. monetary policy, this article reveals the ways in which fluctuations in capital flows and changes in the economy impact emerging markets' trade balance. Moreover, the study highlights the strategic importance of understanding these interactions for developing effective trade policies and maintaining macroeconomic stability. The findings provide practical insights into how emerging market countries can mitigate the adverse impacts of Fed policy shifts and sustain stability in the increasingly interconnected global trading system.
Published Version
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