Divergent central bank strategies

In the past, all central banks practised inflation targeting. Their strategies were therefore homogenous. But this homogeneity has now been broken, due to the absence of inflation despite full employment. The Federal Reserve ’s strategy now seems to be to follow the real economic cycle; The ECB continues to target inflation despite the stability of core inflation in the euro zone; The Bank of Japan has moved to a strategy of supporting fiscal solvency by keeping interest rates at zero at all maturities. The strategies of the major central banks have therefore now clearly diverged. Monetary policy remains countercyclical in the United States, while interest rates remain stuck at zero in the euro zone and Japan.