T&S Asset Management
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Lesson 4 of 6

Transmission: how a rate change reaches the economy

A change in the policy rate first moves market rates, asset prices and the exchange rate, and only later spending, jobs and prices. This lesson sets out the main channels, how long each stage takes in one well-studied economy, the United Kingdom, how quickly market rates follow in the Philippines, and why the mix of fixed and floating debt changes the route.

Published 15 October 2026 Members

In this lesson

  • Two stages
  • The main channels
  • How long it takes: estimates for the United Kingdom
  • The first stage in Southeast Asia: the Philippines
  • A worked example: the cash-flow channel
  • Fixed or floating debt, and what a lender should watch