Navigating Central Bank Policy Divergence

The chapter delves into the potential divergence in short-term rates and policy rates across economies, exploring historical instances and current data. Speakers discuss factors that could mitigate the impact of divergence in G10 and EM economies, questioning the exaggerated concerns regarding central bank policy divergence. Historical patterns of rate hikes, interconnected global financial cycles, and the potential impacts on currency values are all discussed in relation to diverging central bank policies.