For all the recent talk of major central banks coordinating to telegraph policy shifts, it’s easy to forget that each institution faces very different challenges. The Federal Reserve (Fed), the European Central Bank (ECB) and the Bank of Japan have all expressed confidence that they are making progress towards achieving their mandates despite inflation losing steam and remaining well below target for most. The Fed has a clear path for lifting interest rates and shrinking its $4.5 trillion balance sheet, sticking to a view that this year’s inflation setback is probably temporary. The ECB is mulling policy adjustments—most likely by reducing bond purchases—as the expansion powers on, but has stressed the need for prudence and gradualism to foster an inflation recovery. In stark contrast, the Bank of England (BoE) is confronted with an economy where growth is slowing at the same time that inflation is overshooting its 2% target.

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