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Financial conditions in the emerging markets (EMs) have become more dependent on the'world'long-term interest rate, which has been driven down by monetary policies in the advanced economies-notably Quantitative Easing (QE)-and by several non-monetary factors. This paper analyses some new mechanisms that link global long-term rates to monetary policy and to domestic bank lending in the EMs. Understanding these mechanisms could help EM central banks prepare for the exit from QE and higher (and perhaps divergent) policy rates in advanced economies. Although monetary policy in the EMs has continued to be guided by domestic objectives, it has nevertheless lost some traction. Difficult trade-offs now confront central banks.