A different type of G7 central bank divergence

ECONOMIES around the world have been subjected to a common external shock following the outbreak of the Iran war.

Yet, reactions among central banks have been quite diverse, judging from the flurry of recent monetary policy announcements. Some have raised interest rates, some have held them unchanged, and a few have even cut.

What makes this policy divergence even more notable is that it also exists within the Group of Seven nations. If there are no appropriate economic policy adjustments in response, the “normal” market reaction could easily aggravate existing imbalances and geoeconomic stresses.