What is happening in “small” OECD countries?

It has been surprising to see that monetary policy outlooks and decisions in “small” OECD countries (United Kingdom, Australia, Canada, New Zealand) have had a visible influence on financial markets in “large” countries (United States, euro zone). We therefore examine developments in these small countries: The inflation outlook and the fundamental drivers of inflation (growth, labour market equilibrium, commodities, etc.); The monetary policy outlook. Could developments in these small countries drive up long-term interest rates and push down equity markets in the large countries? Th ere are two components to th is question: What is happening in the small countries; Whether there is a stable correlation between the monetary policies of the small countries and the financial markets of the large countries. We find: A link between the monetary policy outlook in the United Kingdom and Canada - but not New Zealand or Australia - and dollar and euro long-term interest rates; Persistent inflationary pressures in the United Kingdom and New Zealand; The prospect of a marked monetary policy tightening in New Zealand, to a lesser degree in the United Kingdom and Canada and less so in Australia. It is therefore above all the situation in the United Kingdom that seems to matter for US and euro-zone financial markets.