The Fluctuation Mechanism, Transmission Path, and Multidimensional Coping Strategies of Capital Flows in Emerging Markets During the Fed’s Interest Rate Hike Cycle

DOI

10.2991/978-94-6239-801-6_63How to use a DOI?

Keywords

Federal Reserve Interest Rate Hikes; Emerging Markets; Capital Flows; Volatility Mechanism; Financial Stability

Abstract

This paper constructs a theoretical framework for analyzing the volatility of capital flows in emerging markets during a Federal Reserve interest rate hike cycle, based on the theories of interest rate parity, international capital flows, and risk transmission mechanisms. The Federal Reserve has initiated multiple rounds of interest rate hike since 2022, making this round of tightening cycle one of the most rapid and substantial in the past four decades.By reviewing existing literature, it reveals the pathways of capital flows through the interest rate channel, exchange rate channel, asset price channel, and debt transmission mechanism. The study finds that emerging market capital flows are highly sensitive to the spillover effects of Federal Reserve policies and are influenced by a combination of domestic economic fundamentals, external risk sentiment, and the geopolitical environment. This paper proposes systematic strategic recommendations from four levels: macroeconomic policy, financial markets, international cooperation, and corporate responses, aiming to provide theoretical and policy references for stabilizing capital flows and preventing financial risks in emerging market countries.

Copyright

© 2026 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Xinyu Wu
PY  - 2026
DA  - 2026/10/23
TI  - The Fluctuation Mechanism, Transmission Path, and Multidimensional Coping Strategies of Capital Flows in Emerging Markets During the Fed’s Interest Rate Hike Cycle
BT  - Proceedings of the 2026 2nd International Conference on Financial Innovation and Marketing Management (FIMM 2026)
PB  - Atlantis Press
SP  - 590
EP  - 598
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6239-801-6_63
DO  - 10.2991/978-94-6239-801-6_63
ID  - Wu2026
ER  -