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From hawkish pauses to rate hikes and dovish tones, the world’s biggest central banks struck very different monetary policy tones last week.

The European Central Bank surprised markets by raising rates on Thursday and worsening inflation outlookwhich led investors to raise rates in the eurozone even more.

This followed a meeting of the Federal Reserve, where the central bank decided to suspend rate increases. Just a few days before, China’s central bank cut its key medium-term interest rates stimulate the economy. In Japan, where inflation is above target, the central bank kept its ultra-loose policy unchanged.

“Taking all these different approaches together, it shows that not only does there seem to be a new divergence in the right approach to monetary policy, but it also shows that the global economy is no longer in sync, but rather a collection of very different cycles,” Carsten Brzeski, global head of macro at ING Germany, told CNBC via email.

In Europe, inflation has fallen in the bloc that uses the euro, but remains well above the ECB’s target. This is also the case in the UK, where the Bank of England is expected to raise rates on Thursday after very strong jobs data.

The Fed, which started its hiking cycle ahead of the ECB, decided to take a break in June – but said there would be two more rate hikes later this year, meaning its hike cycle is not yet complete.

In Asia, however, the picture is different. China’s economic recovery is stallingwhile the decline in both domestic and external demand led policymakers to step up support measures in an effort to revive activity.

In Japan – which has been struggling with a deflationary environment for many years – the central bank said it expected inflation to fall later this year and decided not to normalize policy just yet.

“Every central bank [tries] solve their own economy, which of course includes considerations of changes in financial conditions imposed from abroad,” said Erik Nielsen, Chief Economic Advisor of UniCredit Group.

Impact on the market

The euro rose to a 15-year high against the Japanese yen on Friday amid divergent monetary policy decisions, according to Reuters. The euro also breached the $1.09 mark as investors digested the ECB’s hawkish tone last Thursday.

In the bond markets, the yield on the German 2-year bond reached a 3-month high again on Friday, given the expectation that the ECB will continue its approach in the short term.

“It makes sense that we are starting to see this divergence. In the past it was clear that there was a lot of scope to cover almost all the major central banks, whereas now, given the different stages that jurisdictions are in in the cycle, even more detailed decisions need to be made ,” Konstantin Veit, portfolio manager at PIMCO, told CNBC Street Signs Europe on Friday.

“That will really create opportunities for investors.”

ECB President Christine Lagarde was asked at a press conference to contrast her team’s decision to raise rates with the Federal Reserve’s decision to hold off.

“We’re not thinking about taking a break,” she said. “Are we done? Have we finished the journey? No, we’re not there.” [the] destination,” she said, pointing to at least one more potential rate hike in July.

For some economists, it is only a matter of time before the ECB finds itself in a similar position to the Fed.

“The Fed leads the ECB [as] the US economy is ahead of the Eurozone economy by several quarters. This means that after the September meeting at the latest, the ECB will also be confronted with a debate on whether to suspend or not,” said Brzeski.

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