The focus of recent weeks has been on the pace and synchronisation of interest rate hikes, with almost all major central banks now engaged or set to engage in tightening cycles and many taking an increasingly hawkish stance. But the standard commentary often misses the marked divergence in balance sheet plans which is taking shape. While the US Fed and Bank of England seem set to pare back their asset holdings quickly, the Reserve Banks of Australia and New Zealand will take it slower. And with the ECB and Bank of Japan sitting on the sidelines or even buying more assets, the global impact of quantitative tightening need not be as bad as many fear.
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