This article first appeared in Forum, The Edge Malaysia Weekly, on November 30 - December 6, 2015.

Twenty-one years ago, the world was a very different place. The internet was essentially unknown. Mobile telephones essentially just made phone calls — some of the most sophisticated handsets also offered the game of “snake”. To watch a film at home required a video player and a tape. I had hair.

But in the world of central banks, there are some similarities to that bygone era; 1994 was the last time that the US Federal Reserve tightened policy as the European central banks eased policy. Policy divergence seems likely to return in December of this year, with the Fed tightening policy and the European Central Bank easing policy within days of one another. The days of central banks moving in synch are over.

In the US inflation is up. Employment is up. Growth is up. The idea that interest rates should also move up is not terribly controversial. Market attention is now shifting from the timing of the first rate hike to the question of “what happens next?”

The pace of future rate hikes is the new area of uncertainty. “Lift-off” with the implication of a rapidly rising, rocket-like trajectory to rates is almost certainly not going to happen. Several rate hikes, perhaps a quarter point increase every calendar quarter, is quite plausible.

In Europe the president of the European Central Bank is endlessly in the media, suggesting more and more reasons why the eurozone needs an easier central bank policy. Mario Draghi desires to move policy very specifically in one direction. Like many fans of one direction, his views are being expressed with very little subtlety, although (at least until now) the more passionate scenes that often characterise fans of one direction have been kept to a minimum.

Interest rate cuts and changing quantitative policy measures are certainly part of Draghi’s desired toolkit. This does not meet with universal approval — the German government’s panel of experts recently advocated stopping quantitative policy earlier, not extending it, but Draghi was never going to be universally applauded.

The last 21 years have been about carefully choreographed policy dance steps and reasonably harmonious policy pronouncements. It having been 21 years since policymakers on either side of the Atlantic split to pursue solo careers, the number of people in financial markets who have any direct experience of divergent policy is somewhat limited. So what should investors think about when contemplating different policy directions from the central banks of the world’s two largest economies?

It is worth remembering that the policy divergence has already begun. The Fed has been allowing its balance sheet to decline as a share of gross domestic product (as, indeed, has the Bank of England). This is a subtle form of quantitative policy tightening.

At the same time, the European Central Bank has indulged itself in a significant pace of quantitative policy easing. The fact that interest rate policy may diverge from December is therefore an extension of an existing policy divergence. We have quantitative divergence. Monetary policy divergence is not that different.

The rationale for the divergence is also not terribly surprising. The global economy has become a little less globally synchronised in recent years — which is something to be welcomed. The crisis years meant that economic correlations were high: everything was awful, everywhere, all of the time. This was not an especially happy state of affairs, but confronted by a universal position of awfulness, it was hardly surprising that policymakers responded in a universal manner.

Now, global synchronisation has faded. Across the Organisation for Economic Cooperation and Development economies, core inflation rates are uncorrelated — indeed they are about as uncorrelated as they have ever been. This means that what happens to inflation rates in one country has very little bearing on inflation rates in other economies, and there is no universal global force influencing the direction of core inflation. If inflation is now primarily a local affair then there can be no surprise at the idea that central bank policy responses will be similarly local.

The instinctive reaction of many is that this widening gap between central bank policies must lead to a stronger dollar. If only forecasting currencies were so simple. These policy moves are anticipated, reducing their impact. The dollar has been stronger and weaker as quantitative policy has diverged over the past year. Clearly, the break-up of synchronised central bank policy is a factor for the currency markets but it is not the only, nor even the most important factor for currency markets.

The approaching divergence of central bank policy has generated some anxiety in financial markets. Perhaps investors should calm down. Policy has been divergent for the past year — just in the form of quantitative policy.

Divergence is justified by fundamentals. At some point, central banks have to pursue their own paths.

Paul Donovan is senior global economist at UBS Investment Bank. His latest book, The Truth About Inflation, was published by Routledge in April 2015.

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