## figure1-2

## Source details

**Canonical URL:** [figure1-2](https://www.imf.org/-/media/files/publications/gfsr/2018/oct/ch1/pdf/figure1-2.pdf)

## Other formats

- [Markdown version](/-/media/files/publications/gfsr/2018/oct/ch1/pdf/figure1-2.pdf.md)
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### Overview
- Title: Global Financial Conditions (figure reproduced from source)
- Main observations from the figure:
  - "In China, monetary policy easing has offset the impact of external pressures."
  - "In contrast, financial conditions in other emerging markets have tightened."
  - "Despite continued monetary policy tightening, U.S. financial conditions have eased further."
  - "In the euro area and other systemically important advanced economies, financial conditions have remained relatively easy."
  - "Market expectations of U.S. rates have drifted higher but remain below the Federal Reserve’s dot plot."
  - "In other advanced economies, markets have pushed out the expected timing of interest rate hikes."

### Panels, indicators, and exact numeric labels shown
- Panel 1 — FOMC Projections and Market Implied Policy Rates (Percent)
  - Time labels and numeric markers visible: 2018, 2019, 2020, 2021, Sep. 14, 2018
  - FOMC long-term projected target rate shown (label present)
- Panel 2 — Changes in Policy Rates and in Market Expectations since April 2018 (Basis points)
  - Numeric axis labels visible: –30, –20, –10, 0, 10, 20, 30
  - Country ISO labels shown partially: USA CAN GBR Euro area CHE SWE JPN
- Panel 3 — Financial Conditions Index: United States (Z-scores over 1996–2018:Q3)
  - Vertical axis numeric markers visible: –0.8, –0.6, –0.4, –0.2, 0.0, 0.2, 0.4, 0.6, 0.8
  - Historical years indicated along horizontal axis: 2012 13 14 15 16 17 18
- Panel 4 — Financial Conditions Index: Other Systemically Important Advanced Economies (Z-scores over 1996–2018:Q3)
  - Same Z-score axis scale as Panel 3
  - Historical years indicated: 2012 13 14 15 16 17 18
- Panel 5 — Financial Conditions Index: China (Z-scores over 1996–2018:Q3)
  - Vertical axis numeric markers visible: –1.0, –0.2, –0.4, –0.6, –0.8, 0.0, 0.2, 0.4
  - Historical years indicated: 2012 13 14 15 16 17 18
- Panel 6 — Financial Conditions Index: Other Systemically Important Emerging Market Economies (Z-scores over 1996–2018:Q3)
  - Vertical axis numeric markers visible: –1.0, 0.0, 0.5, 1.0, 1.5, 2.0, 2.5
  - Historical years indicated: 2012 13 14 15 16 17 18

### Construction and interpretation notes (verbatim terminology and exact definitions)
- "The construction of the Financial Conditions Indices is explained in Online Annex 1.1. Panel 1 projections refer to the end of the period."
- "In panels 3–5, values less than zero represent financial conditions that are loose relative to the historical average of 1996 or earliest data available through 2018;"
- "the interest rates category includes the real short-term rate, the term spread for the United States and Germany or the sovereign spread on local currency debt for other countries, and the interbank spread;"
- "the corporate valuations category includes the equity market price-to-book ratio, the local currency corporate bond spread, and the implied volatility index, where available;"
- "and the emerging market external costs category includes the sovereign spread and the corporate spread on external debt, and the external debt-weighted exchange rate."
- "Financial conditions relate to price of risk in 29 jurisdictions with systemically important financial sectors (https://www.imf.org/external/np/fsap/mandatoryfsap.htm)."
- "Data labels in the figure use International Organization for Standardization (ISO) country codes. EM = emerging market; FOMC = Federal Open Market Committee."

### Country group definitions shown in the figure
- "“Other systemically important advanced economies” include Australia, Canada, Denmark, Hong Kong SAR, Japan, Korea, Norway, Singapore, Sweden, Switzerland, and the United Kingdom."
- "“Other systemically important emerging market economies” include Brazil, India, Mexico, Poland, Russia, and Turkey."

*Sources: Bloomberg Finance L.P.; Haver Analytics; IMF, Financial Soundness Indicators; official sources; and IMF staff calculations.*

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_Source: https://www.imf.org/-/media/files/publications/gfsr/2018/oct/ch1/pdf/figure1-2.pdf_