Understanding Central Bank Decoupling

Decoupling refers to the divergence in monetary policy between the Federal Reserve and other major central banks. The Fed has opted to maintain steady interest rates while other central banks have pursued cuts, leading to a significant discrepancy in economic strategies. Historically, the Fed's policy decisions have typically guided the actions of other central banks, but current economic conditions are prompting different responses. This shift is primarily influenced by the varying economic health of the U.S. compared to other regions, particularly Europe, which is struggling with low growth.