The Immediate Global Impact of US Monetary Policy

Fatih Kansoy

Working Paper · February 2026 Dataset Updated

The Immediate Global Impact of US Monetary Policy

University of Oxford Department of Economics Discussion Papers

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Summary

Can international monetary spillovers be measured in real time when foreign cash markets are closed during FOMC announcements? Using US-traded country ETFs as a price-discovery venue, this paper shows that they can, and that a typical contractionary Fed surprise destroys about $280 billion in foreign equity value within thirty minutes.

The effect appears in every country examined, regardless of exchange-rate regime, development level, or capital-account openness. The identification hinge is the geographic discontinuity below: ETF returns line up with overnight gaps for closed markets, but not for markets already open, which is exactly what the real-time spillover design requires.

Figure comparing ETF spillover slopes for closed and open markets across intraday windows. — Headline figure: closed-market ETFs move strongly with later overnight gaps, while open-market ETFs do not, validating the use of US-traded country ETFs as a real-time international spillover measure.

At a Glance

Research question: How large are international spillovers from US monetary policy, and can they be measured before foreign cash markets reopen?
Core finding: Contractionary Fed surprises generate immediate, broadly universal negative spillovers in foreign equity prices.
Method: High-frequency identification around Federal Reserve announcements using US-traded country ETFs.
JEL: E52, F36, F42, G14, G15

Citation

Kansoy, Fatih. 2025/2026. “The Immediate Global Impact of US Monetary Policy.” University of Oxford Department of Economics Discussion Papers.

@article{kansoy2025global,
  title   = {The Immediate Global Impact of US Monetary Policy},
  author  = {Kansoy, Fatih},
  journal = {University of Oxford Department of Economics Discussion Papers},
  year    = {2025}
}