Policy divergence set to resume, but probably not until June

It seems increasingly likely that the much anticipated Trump fiscal stimulus will not take place until later this year. But economic growth and headline inflation have both picked up in the US and this has strengthened the case for the Fed to raise rates rapidly over the coming year or two. Meanwhile, although the economic news for other parts of the world has also been encouraging, the ECB and Bank of Japan will be in no hurry to withdraw their policy support because underlying inflation in the euro-zone and Japan looks set to remain well below target.