The last time the world’s largest central banks were employing such divergent policy, a divided Germany was knitting itself back into one country. In 1989, the Bundesbank had been raising interest rates for a year, believing the West German economy was overheating. They continued hiking for three years after the fall of the Berlin Wall, fearing that massive fiscal transfers from west to east could spark runaway inflation. Japan had begun tightening monetary policy in a belated effort to deal with an asset price bubble. But the Federal Reserve and Bank of England were heading in the opposite direction. After more than a year of inflation-taming rate hikes and slowing economic growth due in part to the mounting losses in the savings & loan crisis, the Fed started lowering the fed funds rate in 1989, and accelerated the pace of cuts as the economy slowed during the first Gulf War in 1990. Similarly, the Bank of England began easing in October 1989―when rates were at a record high of 14.8 percent―and didn’t stop until 1994. In 2015, global monetary policy could look like a mirror image of its 1989 self. The Bank of Japan already expanded the scope of its asset purchases in October. The European Central Bank is expected to announce quantitative easing as early as the first quarter, while the U.S. and the U.K. are expected to start tightening monetary policy in mid-2015. That’s because policy makers’ concerns have been reversed as well, with deflation a bigger worry than inflation in Europe and Japan (a 40 percent drop in crude oil prices since June has exacerbated the deflationary dynamic), and inflation emerging as a potential concern of the Fed and the Bank of England. Credit Suisse expects global oil prices to average $75 in 2015, versus $109 in 2013 and an expected $101 for all of 2014. What does this divergence mean for investors? Volatility will surely return to some markets that have become accustomed to ultra-easy monetary policy out of all four major central banks. As a result, geography will play an increasingly important role in investment decisions. Credit Suisse’s Private Banking & Wealth Management Division continues to prefer Japanese and European equities, where further easing seems likely to prop up stocks in 2015. Meanwhile, European asset-backed securities should get a boost from an ECB purchase program that began in November, and which Credit Suisse estimates could total between €50 and €75 billion over the next two years. Central bank divergence will also have a direct impact on short-term interest rates, which are expected to rise in the U.S. and the U.K. while remaining constrained in the European core. Credit Suisse forecasts more dramatic moves in American interest rates than British rates, with two-year Treasury yields expected to soar from 0.65 percent in early December to 2 percent by the end of 2015, compared to a rise in two-year Gilt yields from 0.54 percent to 1.9 percent. Likewise five-year yields; Treasuries are expected to move from 1.69 percent to 2.90 percent versus Gilts’ increase from 1.35 percent to 2.60 percent. That’s in part due to Credit Suisse’s more hawkish-than-consensus forecast that the Federal Reserve will raise rates four separate times before year-end 2015―a quarter-point each time. Concerns about slow European growth should keep a lid on longer-dated U.S. debt, however, so the bank expects “aggressive flattening” in the yield curve. Yields on two-year German bunds are, remarkably, negative, and are expected to remain so in 2015, while 10-year yields are forecast to trade in a range between 0.7 percent and 1.5 percent. But a bumpier ride for riskier fixed-income products should provide investors with interesting buying opportunities in European credit. On the one hand, says William Porter, Credit Suisse’s Head of European Credit Strategy, says investment-grade bonds have a 40 percent chance of delivering flat total returns for investors. On the other, high-yield bonds offer a 60 percent chance of total returns of 4.4 percent. (That’s a worse outlook than equities, but a potentially useful one for portfolio diversification purposes.) But the European debt market is stuck in a bit of a Catch-22. Most European companies should benefit from low oil prices, and if weak economic growth spurs more aggressive easing from the European Central Bank, that should benefit credit markets. That said, dour economic figures may also trigger risk-off sentiment throughout the year. It’s a bond-picker’s market, in other words, and Porter advises that extra attention be paid both to choice of specific credits and appropriate entry points. That advice applies broadly in 2015. Investors have become accustomed to high degrees of correlation among asset classes in the developed world after six years of near-zero interest rates and supportive monetary policy. But with central banks charting their own courses, it’s time to get selective.