quantifying spillovers is challenging, as the magnitudes ( and even the signs ) through the different channels depend on a multitude of structural features of the global economy. moreover, the size of spillover effects also depends on the drivers of the monetary policy tightening. for instance, when the tightening occurs in the context of high growth, the positive spillovers of that growth can partially offset the adverse spillovers from the tightening of financial conditions. the importance of the context in which monetary policy is changing is increasingly being emphasized in the literature, such as the paper to be presented in session 4 of this conference. the staff at the federal reserve also have looked at these differences using both event - study and model - based approaches. 4 an additional concern, very relevant to the current situation, is what happens when monetary policy is being tightened simultaneously across a wide set of economies. 4 / 6 bis - central bankers'speeches when this concurrent tightening happens, cross - border financial spillovers could amplify the effects of our respective tightening. 5 of course, when others are also tightening, each respective central bank may need to do a bit less to achieve the same outcomes because of these spillover effects. but in a world of uncertainty, it is hard to judge the exact size of these spillovers. given the extent of monetary tightening globally over the past two years, it is striking that emerging market economies have fared relatively well compared with what might have been expected. a number of factors may be at play. several emerging market central banks undertook preemptive rate hikes that helped limit capital outflows, perhaps avoiding worse outcomes. effective communication by advanced - economy central banks may also have prevented greater financial market volatility. in addition, in these recent stress episodes, commodity prices were rising rather than falling, which benefited some vulnerable emerging market economies that are commodity exporters. of course, many other ( commodity - importing ) economies did not have such an advantage. and some emerging market and developing economies, especially those with high dollar - denominated debt, have struggled amid high commodity prices and food security issues as well as the resulting global rise in interest rates following the inflationary shocks from russia's war against ukraine. in sum, u. s. monetary policy actions can produce spillovers abroad and create tradeoffs for foreign monetary policy. spillovers from foreign economies can be sizable for the u. s. as well, especially in the current environment, in which many central banks have tightened policy

encouraged by the strong growth in labor productivity over the past two quarters, which, if sustained, could contribute to further progress toward price stability. i believe that a soft landing is possible, with continued disinflation and a strong labor market, but it is not assured. in setting monetary policy, we need to seek a policy stance that is sufficiently restrictive to bring inflation back to 2 percent over time. i see risks as two sided, requiring us to balance the risk of not tightening enough against the risk of tightening too much. we have seen continued momentum in economic growth and consumer spending, even in the face of monetary policy tightening over the past year and a half. there is a risk that such continued momentum in demand could keep the economy and labor market tight and slow the pace of disinflation. but i am also attuned to the risk of an unnecessarily sharp decline in economic activity and employment. some parts of the economy are showing strain from tighter financial conditions. households at the lower end of the income and wealth distributions have largely exhausted their excess savings, while delinquencies on auto loans and credit cards have risen to pre - pandemic levels or higher. small businesses generally borrow for shorter terms than larger businesses, and they are facing tighter credit conditions and higher rates as they roll over those short - term loans. homebuilders have done surprisingly well over the past year and a half, but they see the current level of mortgage rates as substantially slowing demand. as we try to identify the full, lagged effects of monetary policy tightening, i am considering whether small businesses, the housing sector, and low - and moderateincome households could be warning of broader stress ahead. the linkages we are talking about today connect us in ways that are economically beneficial but also have the potential to transmit stress. for that reason, i am also attentive to the risk of renewed global economic shocks. in recent weeks, oil prices have been volatile but are down from their september peaks. amid highly elevated geopolitical tensions, however, the risk of a sharp rise in global energy prices remains salient. i also see signs of subdued economic growth in our major trading partners, whose health affects u. s. economic conditions related to our dual mandate. china's economic growth has remained below pre - pandemic rates, and activity in its property sector has been extremely weak. in europe, recent data point to muted growth as the region deals with