Despite the current delay in the Fed’s expected monetary policy normalisation path, the Fed and the Bank of England (BoE) are expected to be the first AEs to increase their policy rates. Against this background, it still appears that monetary policy paths will differ amongst major central banks, in terms of the trend, timing and pace, adding to the uncertainty in global financial markets.
These diverging monetary policy paths create a challenging environment in which central banks have to operate in order to attain a balance between macroeconomic challenges and policy choices. One of these possible choices could be a revision of monetary policy mandates due to changes in inflation trends.