How is potential central bank monetary policy divergence affecting asset allocation?

BoE, Federal Reserve and ECB

Markets have rapidly changed their forecasted expectations for central bank rate cuts in 2024, which has had a material impact on asset allocation. Coming into the year, and experts were optimistic about developed market central banks embarking on serious interest rate cuts, as economic forecasts and data signalled that inflation had past its peak. The US and its Federal Reserve was keenly watched, as markets priced in as many as six rate cuts by the end of 2024. Now the picture has shifted, and as inflation fell less than expected economists have pulled back their expectations to ...