Global Central Bank Policy Fractures: The End of "Synchronized Action"

The era of coordinated global monetary policy appears to be over. Bloomberg Economics reports that 2026 will likely see a sharp divergence in interest rate paths, driven largely by the idiosyncratic policies of the incoming US administration.

The Great Divergence

While the Federal Reserve is under intense political pressure to slash rates to 1% or lower, other major central banks are charting independent courses to protect their currencies and combat residual inflation.

Forex Impact

This policy fragmentation is expected to drive increased volatility in cross-currency pairs.

As the “Trump Trade” evolves from speculation to policy implementation, Forex traders must focus on relative central bank independence as a key driver of valuation.