Financial technology has the potential to alter the transmission of monetary policy by lowering search costs and expanding banking markets. This paper studies the reaction of online banks to changes in the federal funds rate. We find that a 100 basis points increase in the federal funds rate leads to a 30 basis points larger increase in the deposit rates of online banks relative to traditional banks. Consistent with the rate movements, online bank deposits experience inflows, while traditional banks experience outflows. Results are similar across markets with differing competitiveness and demographics, but vary with the stickiness of depositors.

We re-examine the monetary policy spillovers to Emerging Market Economies (EME) in the form of capital flow reversals, using sectoral-level securities holdings data for Euro Area investors. In response to a surprise mone- tary tightening, active investors such as investment funds re-balance their portfolios away from EME, while more passive, long term investors such

as insurance companies and banks exhibit no significant reaction on average. For active investors, the reallocation out of EME appears stronger under synchronized monetary tightening between the Fed and the ECB. However, these investors may even inject more capital to EME securities depending on whether the monetary tightening surprises contain positive news about the Euro Area economy. Issuers’ monetary-fiscal stability may explain the heterogeneous impact of the spillover.

We develop a high-frequency inflation index derived from German tweets through sophisticated NLP methods. This index aligns closely with realized inflation and consumer inflation expectations, both nationally and regionally, offering enhanced predictive precision over current benchmarks. Notably, it responds to monetary policy shifts, rising post-easing and falling after unexpected tightenings. The influence is particularly pronounced from tweets by private users during recent periods of elevated inflation. Elevated inflation expectations correlate with reduced consumer spending, as gauged from online transaction data, particularly on discretionary goods. Consequently, this Twitter-centric index offers a valuable real-time tool to assess prevailing inflation sentiments.