The policies of the world’s major central banks are about to diverge. That matters far more to financial markets than to the real economy.
The big change is in the United States, which has now officially announced the first small step on the long journey from exceptional monetary policy to what was once considered normal. If all goes according to plan, January’s small reduction of bond purchases will be the first of many. When the buying stops, the policy interest rate can start to increase, perhaps in 2015.