Central banks used to move together. However, the coordination fell apart after the crisis with some central banks loosening aggressively while others kept rates on hold or raised them. This divergence is likely to continue as those who loosened early are now expected to start raising rates, while those who did not loosen are still looking to ease or remain on hold for a while. The divergence will affect the way investors need to think about interest rate cycles.
About the authors
Economist Insights is written by Joshua McCallum and Gianluca Moretti. Joshua has been working at Global Asset Management with the title of Senior Fixed Income Economist since 2005. Prior to this, he worked at the UK Treasury as a macroeconomist. Gianluca joined Global Asset Management in 2010. Prior to this he worked at the Italian central bank.
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