VTI - The Divergence Of World Central Bank Monetary Policies

2024-06-11 09:07:56 ET

Summary

• Major world central banks expected inflation to approach 2% in 2024, leading to an easing monetary policy, except for the Bank of Japan.
• The Bank of Canada and European Central Bank cut rates, while the Federal Reserve and Bank of England held off due to stubbornly high inflation.
• The Bank of Japan reversed 8 years of Negative Interest Rates, raising the policy rate and considering further tightening, diverging from other G7 central banks.

At the beginning of 2024, all major world central banks were on the same page.

Inflation, which had spiked to 40-year highs in 2022, came down in 2023, and was expected to approach the common central bank target rate of 2% this year. The major world central banks were looking to ease monetary policy, except for the Bank of Japan, which already was easy, having maintained their Negative Interest Rate Policy of the prior 8 years and still executing Quantitative Easing ("QE")....

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