...Monetary policy continues to support credit ratings across asset classes in many countries, with over 20 central banks having eased policy so far this year, including the European Central Bank (ECB) and the People's Bank of China. However, increasing divergence in monetary policy between the world's main central banks is already having a significant impact on global exchange rates and growth prospects. The prospect of higher US policy rates in the near term has supported a sharp appreciation of the US dollar. Meanwhile, the ECB's launch of quantitative easing (QE) has led to sharp falls in eurozone benchmark interest rates, opening a wider gap with US and UK government bond yields. A significant portion of European government bonds are now trading at negative nominal yields, and long-term rates in Germany are now approaching zero. A more rapid US policy rates rise than anticipated, or central banks' divergent policy paths triggering even faster moves in relative interest rates, could lead...
