“This speech reconsiders monetary policy interactions in the light of the fresh evidence provided by the events of May through August 2013: (i) Some emerging market central banks found themselves raising policy rates to resist currency depreciation. (ii) Bond yields in emerging market local bond markets as well reflected or even amplified the backup in dollar yields. (iii) Emerging market currencies depreciated to varying extents, despite policy responses. (iv) The extension of dollar credit to borrowers outside the United States slowed, with a sharp decline in net bond issuance in the third quarter, and, in the second quarter, a reversal in bank flows in Latin America and a deceleration in those to Asia. (v) Measures of portfolio capital flows showed some reversals, but in addition investors hedged long currency positions in forward markets. Policymakers have an opportunity to prepare for any renewed financial market strains from the normalisation of monetary policy in major economies.”