One Policy to Rule Them All: Why Central Bank Divergence Is So Slow

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Wall Street Journal

Breaking up really is hard to do—if you’re a central banker. Talk of monetary policy divergence has proved to be difficult to turn into reality in a low-growth, low-inflation world.

Sure, the spotlight is on the U.S. Federal Reserve’s efforts to lift interest rates, especially as the policy shindig in Jackson Hole looms. But the bigger global picture is of yet more policy easing in developed economies. The headlines have been taken by high-profile actions this year like the Bank of Japan’s introduction of negative rates, the European Central Bank’s bond buying and the Bank of England’s kitchen-sink response to Brexit.

But they are far from alone. In the past 12 months, the central banks of Australia, New Zealand, Norway and Sweden have all eased policy too, in some cases reversing earlier moves to raise rates. Read more