## 2.1    Transmission mechanisms

## Source details

**Canonical URL:** [2.1    Transmission mechanisms](https://www.imf.org/-/media/files/publications/wp/2023/english/wpiea2023215-print-pdf.pdf)

## Other formats

- [Markdown version](/-/media/files/publications/wp/2023/english/wpiea2023215-print-pdf.pdf.md)
- [Structured JSON version](/-/media/files/publications/wp/2023/english/wpiea2023215-print-pdf.pdf.json)

---

### Conceptual channels
- Monetary policy can affect commodity prices through at least four channels:
  - Cost of carry channel: changes in interest rates affect the opportunity cost of commodity storage. A substantial increase in the Fed funds rate provides investors an incentive to reduce commodity storage and search for higher yields in the bond markets. Higher interest rates also incentivize resource owners to accelerate extraction (Hotelling’s resource model), increasing supply and contributing to lower commodity prices.
  - Real-economy channel: interest rate changes affect investment and consumption, driving current and future commodity consumption. Forward-looking agents adjust portfolios today; commodities with large exposure to investment demand (e.g., base metals) are expected to react to monetary policy shocks.
  - Liquidity channel: monetary policy of major central banks affects global financial conditions and liquidity trading in physical and derivative markets.
  - Exchange rate channel: for commodities internationally traded in USD, an appreciation of the USD increases commodity prices in foreign local currency, decreasing demand and stimulating supply, putting downward pressure on USD-priced commodity prices.

### High-frequency empirical approach (daily data)
- Data:
  - Disaggregated daily nominal commodity price futures (rolling front month contracts) from Bloomber L.P., denominated in USD, for 39 commodities (1990-2019 for full-sample aggregation).
  - Aggregation into 11 sub-indexes using trade weights from the IMF Primary Commodity Price System (PCPS).
  - Monetary policy shocks for the USA and Europe follow Jarociński and Karadi (2020): the pure monetary policy shock identified within their proxy-SVAR, measured as exogenous interest rate shocks that correlate negatively with the stock market on the day of the announcement.
- Empirical strategy:
  - Local Projection regression following Jordà (2005):
    - Dependent variable: lny_{i,t+h} − lny_{i,t−1} for h = 0,1,...,24.
    - MPS_t is the monetary policy shock, measured in basis points of futures’ rates around a 30-min window of the announcement.
    - Lags: L = 12 of lags of lny and the shock.
  - Sample periods:
    - US: business days 1990M2-2019M5.
    - ECB: business days 1999M1-2020M6.

### United States: US monetary policy shocks — high-frequency results
- Instrument responses:
  - On impact, a 10 basis points shock increases the Fed Fund Rate by 0.1 percentage points (10 basis points); effect is persistent throughout the month.
  - The dollar index (DXY) appreciates with a peak response of 0.4% after 2 business days; the effect vanishes after a week.
- Peak responses of commodity sub-indexes to a 10 basis points increase in the Fed Funds Rate:
  - Base metals: decline 2.5% (after 18 business days).
  - Energy (WTI and Brent): decline 2% (after 21 business days).
  - Other significant declines: cotton and rubber, beverages, precious metals, cereals.
- Additional commodity-specific examples:
  - Coffee: peak decline 2.5%.
  - Sugar: peak decline 2.3%.
  - Wheat: peak decline 1.5%.
  - Milk: peak decline 1.3%.
- Inventories (subsample since 2016):
  - Base metals display a larger decline in inventories after monetary tightening, consistent with price responses and the cost-of-carry channel.
- Natural gas (Henry Hub):
  - Full sample: Henry Hub shows no response to US monetary policy shocks.
  - Subsample 2016-2019: Henry Hub prices respond significantly and are the most responsive commodity price to US monetary policy shocks.
  - Note: structural changes (shale gas, LNG exports) increased storability and integration with global LNG market.

### Europe: ECB monetary policy shocks — high-frequency results
- Specification includes 24 business days lags of the one-year US bond yield to control for US stance.
- Peak responses to a 10 basis points increase in ECB funds rate (sub-indexes):
  - Effects on oil prices similar to US but less precisely estimated.
  - No effect detected on base metals, raw materials, and cereals.
  - In general, ECB shocks have negative effects on commodity prices but responses are less precisely estimated.

### Proxy-SVAR identification and monthly analysis
- Model:
  - Structural SVAR with a monetary policy shock identified via an external instrument (pure monetary policy shock from Jarociński and Karadi (2020)).
  - Baseline monthly variables: one-year treasury bill yield, US headline CPI, US core CPI, US industrial production (IP), excess bond premium (EBP), WTI Oil price, Food Price Index, Base Metals Price Index.
  - Data span: 1990m1 to 2019m5.
- Two-stage procedure:
  - First stage: regress monetary policy surprise instrument on the reduced-form VAR innovation for the one-year treasury bill to identify impact on interest rate.
  - Second stage: regress predicted value on remaining VAR innovations to identify impact coefficients.

### Proxy-SVAR impulse responses (10 basis points US tightening)
- On impact:
  - Oil prices decline by 2 percent on impact; effect persists for 8 months.
  - Food prices decline by 1 percent; effect is less persistent.
  - Copper price: a 10 bps increase reduces copper price by 6% after two months; effect vanishes after ten months.
- Macroeconomic responses:
  - One-year treasury bill increases on impact.
  - Headline inflation declines on impact.
  - Industrial production and core inflation display more significant declines after about a year.
  - Significant impact on the excess bond premium.
- Robustness:
  - Similar results hold with augmented model including USD dollar index and global IP index.

### Commodity-price channel of US monetary policy — decomposition exercises
- Method: shut off the response of oil (and food) prices to the monetary policy shock by setting coefficients of the oil (and food) price equations to zero (Bernanke, Gertler, and Watson (1997) approach).
- Key findings from decomposition (10 basis points shock):
  - Benchmark: headline CPI declines by 0.12 percentage points in the first semester.
  - No oil and food responses: headline CPI would have declined by 0.07 percentage points in the first semester.
  - Interpretation:
    - Oil prices have a dominant role because oil affects food prices but not vice versa.
    - Oil and food generate a 1-2% reduction lasting 8-10 months; core inflation shows declines mainly after a year, leading to minimal effects of oil and food on core inflation.
    - Reasons for limited core inflation effects: mild/persistent declines in oil/food and their status as mainly non-durable goods.

### Importance of base metals
- High-frequency and monthly evidence:
  - Base metal index is the most responsive to US monetary policy shocks.
  - Base metal prices decline substantially during the first six months and remain below pre-shock levels for more than a year (15 months).
  - The reduction in base metal prices is larger and more persistent than for oil and food.
- Effects on inflation:
  - Base metals have a larger relative importance on headline CPI than food prices.
  - Base metals have significant effects on core inflation (unlike oil and food), due to:
    - Larger and more persistent price declines.
    - When base metal prices are held constant, the USD appreciates significantly less, implying commodity demand effects via exchange rates.
    - Primary metals are key intermediate inputs to investment hubs; their price changes transmit strongly to final prices.
- Example magnitude:
  - Copper: decline of 6% after two months for a 10 basis points Fed tightening (proxy-SVAR result).

### Cross-country spillovers
- Approach: augment the proxy-SVAR to include countries’ CPI and bilateral exchange rates between the US and each country; focus on oil, base metals, and food channels.
- Findings (illustrative):
  - Most countries’ CPI decline after a US monetary policy tightening.
  - Decompositions comparing benchmark CPI response and CPI absent commodity-price channel of oil and food show that oil and food responses amplify the CPI decline in many countries over a 12-month horizon after a 10 basis points US tightening.

### Policy implications and recommendations
- Major central banks should take into consideration their spillback and spillovers through a commodity price channel when setting policy objectives.
- Given the Federal Reserve’s role in setting the tone for the global monetary policy stance, and the ability of other major central banks such as the ECB to also affect commodity prices, the commodity price channel could be strengthened during periods of high monetary policy coordination.

*Source: IMF working paper chapter "2.1    Transmission mechanisms" (wpiea2023215-print-pdf).*

### 1. Oil Price

### Key findings
- Monetary policy has a strong direct effect on commodity prices, especially for industrial and storable commodities such as oil and metals.
- After a 10 bps monetary policy surprise, the decline in oil and food prices over the course of 6 months reduces both domestic and other countries’ inflation by 0.05 percent on average.
- The commodity price channel of US monetary policy has relatively larger spillovers to other countries than spillbacks to the US.
- Spillovers from US monetary policy shocks tend to be more relevant for consumer prices in other AEs; reactions in EMs are less precisely estimated due to more regulated prices.
- The commodity channel for core inflation is mainly driven by base metals (i.e., copper).

### Contribution of the commodity-price channel to headline inflation (Table 1)
- United States:
  - Benchmark: 0-6 Months -0.12%; 0-12 Months -0.12%; 12-24 Months -0.02%
  - No oil: 0-6 Months -0.09%; 0-12 Months -0.07%; 12-24 Months -0.02%
  - Contribution: (32%)(40%)NA
  - No oil, no food: 0-6 Months -0.07%; 0-12 Months -0.06%; 12-24 Months -0.01%
  - Contribution: (41%)(47%)NA
- Other Countries:
  - Benchmark: 0-6 Months -0.07%; 0-12 Months -0.07%; 12-24 Months -0.00%
  - No oil: 0-6 Months -0.04%; 0-12 Months -0.03%; 12-24 Months -0.01%
  - Contribution: (48%)(57%)NA
  - No oil, no food: 0-6 Months -0.02%; 0-12 Months -0.02%; 12-24 Months -0.00%
  - Contribution: (66%)(74%)NA
- Summary numeric statements:
  - For the average country, the commodity-price channel accounts for 66 percent of the total spillover of US monetary policy on inflation in the first semester.
  - The oil price alone contributes 48 percent (average country).
  - For US spillbacks these numbers are 41% and 32%, respectively (6-month horizon).
  - These contributions are larger over a 12-month horizon but vanish after a year as core inflation starts driving headline dynamics.

### Country-level responses and channels
- Example: Spain — a US monetary policy rate increase induces a 0.1% decline in the headline CPI of Spain; this entire effect is mediated by the response of oil and food prices.
- Example: Portugal:
  - In the main specification (oil and food), headline CPI response reduced from -0.25% to -0.18% when oil and food prices respond.
  - In specification with oil and base metals, absent response of oil and base metal prices, Portugal headline CPI declines from -0.31% to -0.08%.
- Exchange rate channel:
  - In most countries, a US monetary policy tightening results in appreciation of the US dollar.
  - The exchange rate channel is not independent of the commodity price channel (example: Switzerland—depreciation of the Swiss Franc is mitigated once commodity prices are assumed not to decline).

### Core inflation and base metals
- For a subsample of 20 countries, oil and base metal prices significantly contribute to core inflation.
- Over a 6 months period and for the average country:
  - The response of oil and food prices accounts for 1.56% of the response of core CPI to US monetary policy.
  - The response of oil and base metal prices accounts for 69% of the response of core CPI to US monetary policy.

### Methodology: commodity-price channel decomposition (Appendix 5.1)
- Decomposition approach in the spirit of Bernanke et al. (1997): answer the question “what would have been the response of inflation if oil (and food) prices had not moved?”
- Implemented within a proxy-SVAR framework; imposing that commodity price y does not react contemporaneously to the monetary policy shock ε1,t and does not respond to dynamic effects from lags of x, y, z.
- Tracing the effects of a shock to ε1 works only through its direct effect on x and z and the internal dynamics through lags in z and x.

### Commodity coverage, trading volumes, and index weights
- Sample period for commodity list: 1990-2019.
- Selected average daily trading value in 2019 (exact figures preserved):
  - Brent Crude Oil — ICE Futures Europe Commodities — USD/bbl. — 64,355,775
  - WTI Crude Oil — New York Mercantile Exchange — USD/bbl. — 147,772,482
  - Copper — Commodity Exchange, Inc. — USD/lb. — 10,342,374
  - Gold — Commodity Exchange, Inc. — USD/t oz. — 31,960,854
  - Henry Hub Natural Gas — New York Mercantile Exchange — USD/MMBtu — 35,657,120
  - Soybean — Chicago Board of Trade — USD/bu. — 18,607,309
  - Corn — Chicago Board of Trade — USD/bu. — 37,904,454
- Selected commodity weights in indexes (exact percentages preserved):
  - Brent Crude — All 18.4% — Energy 50.0%
  - WTI Crude — All 18.4% — Energy 50.0%
  - Copper — All 6.5% — Base Metal 18.4% — Metal 49.6%
  - Gold — All 19.7% — Precious Metal 55.4% — Metal 87.9%
  - Soybeans — All 3.6% — Agriculture 13.0% — Food 16.4% — Oilseed 85.8%
  - Wheat — All 2.7% — Agriculture 9.7% — Food 12.3% — Cereal 44.4%

### Policy implications and recommendations
- Major central banks should take into consideration their spillback and spillovers through a commodity price channel when setting policy objectives.
- Given the Federal Reserve’s role in setting the tone for the global monetary policy stance, and the ability of other major central banks such as the ECB to also affect commodity prices, the commodity price channel could be strengthened during periods of high monetary policy coordination.

*Source: wpiea2023215-print-pdf - 1. Oil Price*

### 2.1    Transmission mechanisms

### 2.1    Transmission mechanisms

### Conceptual channels
- Monetary policy can affect commodity prices through at least four channels:
  - Cost of carry channel: changes in interest rates affect the opportunity cost of commodity storage. A substantial increase in the Fed funds rate provides investors an incentive to reduce commodity storage and search for higher yields in the bond markets. Higher interest rates also incentivize resource owners to accelerate extraction (Hotelling’s resource model), increasing supply and contributing to lower commodity prices.
  - Real-economy channel: interest rate changes affect investment and consumption, driving current and future commodity consumption. Forward-looking agents adjust portfolios today; commodities with large exposure to investment demand (e.g., base metals) are expected to react to monetary policy shocks.
  - Liquidity channel: monetary policy of major central banks affects global financial conditions and liquidity trading in physical and derivative markets.
  - Exchange rate channel: for commodities internationally traded in USD, an appreciation of the USD increases commodity prices in foreign local currency, decreasing demand and stimulating supply, putting downward pressure on USD-priced commodity prices.

### High-frequency empirical approach (daily data)
- Data:
  - Disaggregated daily nominal commodity price futures (rolling front month contracts) from Bloomber L.P., denominated in USD, for 39 commodities (1990-2019 for full-sample aggregation).
  - Aggregation into 11 sub-indexes using trade weights from the IMF Primary Commodity Price System (PCPS).
  - Monetary policy shocks for the USA and Europe follow Jarociński and Karadi (2020): the pure monetary policy shock identified within their proxy-SVAR, measured as exogenous interest rate shocks that correlate negatively with the stock market on the day of the announcement.
- Empirical strategy:
  - Local Projection regression following Jordà (2005):
    - Dependent variable: lny_{i,t+h} − lny_{i,t−1} for h = 0,1,...,24.
    - MPS_t is the monetary policy shock, measured in basis points of futures’ rates around a 30-min window of the announcement.
    - Lags: L = 12 of lags of lny and the shock.
  - Sample periods:
    - US: business days 1990M2-2019M5.
    - ECB: business days 1999M1-2020M6.

### United States: US monetary policy shocks — high-frequency results
- Instrument responses:
  - On impact, a 10 basis points shock increases the Fed Fund Rate by 0.1 percentage points (10 basis points); effect is persistent throughout the month.
  - The dollar index (DXY) appreciates with a peak response of 0.4% after 2 business days; the effect vanishes after a week.
- Peak responses of commodity sub-indexes to a 10 basis points increase in the Fed Funds Rate:
  - Base metals: decline 2.5% (after 18 business days).
  - Energy (WTI and Brent): decline 2% (after 21 business days).
  - Other significant declines: cotton and rubber, beverages, precious metals, cereals.
- Additional commodity-specific examples (Appendix):
  - Coffee: peak decline 2.5%.
  - Sugar: peak decline 2.3%.
  - Wheat: peak decline 1.5%.
  - Milk: peak decline 1.3%.
- Inventories (subsample since 2016):
  - Base metals display a larger decline in inventories after monetary tightening, consistent with price responses and the cost-of-carry channel.
- Natural gas (Henry Hub):
  - Full sample: Henry Hub shows no response to US monetary policy shocks.
  - Subsample 2016-2019: Henry Hub prices respond significantly and are the most responsive commodity price to US monetary policy shocks.
  - Note: structural changes (shale gas, LNG exports) increased storability and integration with global LNG market.

### Europe: ECB monetary policy shocks — high-frequency results
- Specification includes 24 business days lags of the one-year US bond yield to control for US stance.
- Peak responses to a 10 basis points increase in ECB funds rate (sub-indexes):
  - Effects on oil prices similar to US but less precisely estimated.
  - No effect detected on base metals, raw materials, and cereals.
  - In general, ECB shocks have negative effects on commodity prices but responses are less precisely estimated.

### Proxy-SVAR identification and monthly analysis
- Model:
  - Structural SVAR with a monetary policy shock identified via an external instrument (pure monetary policy shock from Jarociński and Karadi (2020)).
  - Baseline monthly variables: one-year treasury bill yield, US headline CPI, US core CPI, US industrial production (IP), excess bond premium (EBP), WTI Oil price, Food Price Index, Base Metals Price Index.
  - Data span: 1990m1 to 2019m5.
- Two-stage procedure:
  - First stage: regress monetary policy surprise instrument on the reduced-form VAR innovation for the one-year treasury bill to identify impact on interest rate.
  - Second stage: regress predicted value on remaining VAR innovations to identify impact coefficients.

### Proxy-SVAR impulse responses (10 basis points US tightening)
- On impact:
  - Oil prices decline by 2 percent on impact; effect persists for 8 months.
  - Food prices decline by 1 percent; effect is less persistent.
  - Copper price: a 10 bps increase reduces copper price by 6% after two months; effect vanishes after ten months.
- Macroeconomic responses:
  - One-year treasury bill increases on impact.
  - Headline inflation declines on impact.
  - Industrial production and core inflation display more significant declines after about a year.
  - Significant impact on the excess bond premium.
- Similar results hold with augmented model including USD dollar index and global IP index.

### Commodity-price channel of US monetary policy — decomposition exercises
- Method: shut off the response of oil (and food) prices to the monetary policy shock by setting coefficients of the oil (and food) price equations to zero (Bernanke, Gertler, and Watson (1997) approach).
- Key findings from decomposition (10 basis points shock):
  - Benchmark: headline CPI declines by 0.12 percentage points in the first semester.
  - No oil and food responses: headline CPI would have declined by 0.07 percentage points in the first semester.
  - Interpretation:
    - Oil prices have a dominant role because oil affects food prices but not vice versa.
    - Oil and food generate a 1-2% reduction lasting 8-10 months; core inflation shows declines mainly after a year, leading to minimal effects of oil and food on core inflation.
    - Reasons for limited core inflation effects: mild/persistent declines in oil/food and their status as mainly non-durable goods.

### Importance of base metals
- High-frequency and monthly evidence:
  - Base metal index is the most responsive to US monetary policy shocks.
  - Base metal prices decline substantially during the first six months and remain below pre-shock levels for more than a year (15 months).
  - The reduction in base metal prices is larger and more persistent than for oil and food.
- Effects on inflation:
  - Base metals have a larger relative importance on headline CPI than food prices.
  - Base metals have significant effects on core inflation (unlike oil and food), due to:
    - Larger and more persistent price declines.
    - When base metal prices are held constant, the USD appreciates significantly less, implying commodity demand effects via exchange rates.
    - Primary metals are key intermediate inputs to investment hubs; their price changes transmit strongly to final prices.
- Example magnitude:
  - Copper: decline of 6% after two months for a 10 basis points Fed tightening (proxy-SVAR result).

### Cross-country spillovers
- Approach: augment the proxy-SVAR to include countries’ CPI and bilateral exchange rates between the US and each country; focus on oil, base metals, and food channels.
- Findings (illustrative):
  - Most countries’ CPI decline after a US monetary policy tightening.
  - Decompositions comparing benchmark CPI response (blue) and CPI absent commodity-price channel of oil and food (red) show that oil and food responses amplify the CPI decline in many countries over a 12-month horizon after a 10 basis points US tightening.

*Source: IMF working paper chapter "2.1    Transmission mechanisms" (wpiea2023215-print-pdf).*

### 1. Oil Price

### 1. Oil Price

### Key findings
- Monetary policy has a strong direct effect on commodity prices, especially for industrial and storable commodities such as oil and metals.
- After a 10 bps monetary policy surprise, the decline in oil and food prices over the course of 6 months reduces both domestic and other countries’ inflation by 0.05 percent on average.
- The commodity price channel of US monetary policy has relatively larger spillovers to other countries than spillbacks to the US.
- Spillovers from US monetary policy shocks tend to be more relevant for consumer prices in other AEs; reactions in EMs are less precisely estimated due to more regulated prices.
- The commodity channel for core inflation is mainly driven by base metals (i.e., copper).

### Contribution of the commodity-price channel to headline inflation (Table 1)
- United States:
  - Benchmark: 0-6 Months -0.12%; 0-12 Months -0.12%; 12-24 Months -0.02%
  - No oil: 0-6 Months -0.09%; 0-12 Months -0.07%; 12-24 Months -0.02%
  - Contribution: (32%)(40%)NA
  - No oil, no food: 0-6 Months -0.07%; 0-12 Months -0.06%; 12-24 Months -0.01%
  - Contribution: (41%)(47%)NA
- Other Countries:
  - Benchmark: 0-6 Months -0.07%; 0-12 Months -0.07%; 12-24 Months -0.00%
  - No oil: 0-6 Months -0.04%; 0-12 Months -0.03%; 12-24 Months -0.01%
  - Contribution: (48%)(57%)NA
  - No oil, no food: 0-6 Months -0.02%; 0-12 Months -0.02%; 12-24 Months -0.00%
  - Contribution: (66%)(74%)NA
- Summary numeric statements:
  - For the average country, the commodity-price channel accounts for 66 percent of the total spillover of US monetary policy on inflation in the first semester.
  - The oil price alone contributes 48 percent (average country).
  - For US spillbacks these numbers are 41% and 32%, respectively (6-month horizon).
  - These contributions are larger over a 12-month horizon but vanish after a year as core inflation starts driving headline dynamics.

### Country-level responses and channels
- Example: Spain — a US monetary policy rate increase induces a 0.1% decline in the headline CPI of Spain; this entire effect is mediated by the response of oil and food prices.
- Example: Portugal —
  - In the main specification (oil and food), headline CPI response reduced from -0.25% to -0.18% when oil and food prices respond.
  - In specification with oil and base metals, absent response of oil and base metal prices, Portugal headline CPI declines from -0.31% to -0.08%.
- Exchange rate channel:
  - In most countries, a US monetary policy tightening results in appreciation of the US dollar.
  - The exchange rate channel is not independent of the commodity price channel (example: Switzerland—depreciation of the Swiss Franc is mitigated once commodity prices are assumed not to decline).
- Figures referenced (descriptive):
  - Figure 8: 12-month response of US monetary policy on countries inflation (proxy-SVAR): oil and food — blue square = peak response; red square = response assuming commodity prices do not react.
  - Figure A7: 12-month response of US monetary policy on countries inflation (proxy-SVAR): oil and base metals — blue square = peak response; red square = response assuming commodity prices (oil and base metals) do not react.
  - Figure A8: 12-month effect on countries exchange rate (proxy-SVAR): oil and food — blue and red squares are average one year response after a 10 basis points increase in the US interest rate; 68 percent confidence intervals displayed.

### Core inflation and base metals
- For a subsample of 20 countries, oil and base metal prices significantly contribute to core inflation.
- Over a 6 months period and for the average country:
  - The response of oil and food prices accounts for 1.56% of the response of core CPI to US monetary policy.
  - The response of oil and base metal prices accounts for 69% of the response of core CPI to US monetary policy.

### Methodology: commodity-price channel decomposition (Appendix 5.1)
- Decomposition approach in the spirit of Bernanke et al. (1997): answer the question “what would have been the response of inflation if oil (and food) prices had not moved?”
- Implemented within a proxy-SVAR framework; imposing that commodity price y does not react contemporaneously to the monetary policy shock ε1,t and does not respond to dynamic effects from lags of x, y, z.
- Tracing the effects of a shock to ε1 works only through its direct effect on x and z and the internal dynamics through lags in z and x.

### Commodity coverage, trading volumes, and index weights
- Sample period for commodity list: 1990-2019.
- Table A1 (average daily trading value in 2019) — selected entries (exact figures preserved):
  - Brent Crude Oil — ICE Futures Europe Commodities — USD/bbl. — 64,355,775
  - WTI Crude Oil — New York Mercantile Exchange — USD/bbl. — 147,772,482
  - Copper — Commodity Exchange, Inc. — USD/lb. — 10,342,374
  - Gold — Commodity Exchange, Inc. — USD/t oz. — 31,960,854
  - Henry Hub Natural Gas — New York Mercantile Exchange — USD/MMBtu — 35,657,120
  - Soybean — Chicago Board of Trade — USD/bu. — 18,607,309
  - Corn — Chicago Board of Trade — USD/bu. — 37,904,454
- Table A2 (commodity weights in indexes) — selected entries (exact percentages preserved):
  - Brent Crude — All 18.4% — Energy 50.0%
  - WTI Crude — All 18.4% — Energy 50.0%
  - Copper — All 6.5% — Base Metal 18.4% — Metal 49.6%
  - Gold — All 19.7% — Precious Metal 55.4% — Metal 87.9%
  - Soybeans — All 3.6% — Agriculture 13.0% — Food 16.4% — Oilseed 85.8%
  - Wheat — All 2.7% — Agriculture 9.7% — Food 12.3% — Cereal 44.4%

### Policy implications and recommendations
- Major central banks should take into consideration their spillback and spillovers through a commodity price channel when setting policy objectives.
- Given the Federal Reserve’s role in setting the tone for the global monetary policy stance, and the ability of other major central banks such as the ECB to also affect commodity prices, the commodity price channel could be strengthened during periods of high monetary policy coordination.

*Source: wpiea2023215-print-pdf - 1. Oil Price*

---


_Source: https://www.imf.org/-/media/files/publications/wp/2023/english/wpiea2023215-print-pdf.pdf_