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

WikiFX

| 2026-01-12 16:20

Abstract：Global central banks are abandoning synchronized policy as the "Trump Factor" forces a divergence between the Federal Reserve and its international peers.

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.

The Hawkish Camp: The Bank of Japan (BoJ), Canada, and Switzerland are projected to lean towards holding or hiking rates, resisting the global easing trend.

The Wait-and-See Approach: The ECB and Bank of England are expected to cut rates far less aggressively than the Fed, creating significant yield differentials.

Commodity Currencies: Australia and New Zealand may decouple entirely, focusing on domestic demand shocks.

Forex Impact

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

EUR/USD: If the Fed capitulates to political pressure for deep cuts while the ECB holds steady, the Euro could see substantial appreciation against the Greenback.

Carry Trades: The widening gap between US rates and other developed economies may rewrite the playbook for carry trades in Q1 2026.

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.