Central banks diverge as the Fed's risk-management tilt steadies term premia while the Bank of Korea hikes to a level not seen in years.

The Bank of Korea's hike to 3% comes with growth forecasts revised up sharply, yet inflation is expected to stay above target through 2027. The Fed's tilt, not just its rate decisions, systematically compresses the common risk premium, an effect equivalent to 20% of intermeeting yield volatility. Nagel's warning against guidance beyond September echoes the Fed's caution about conditional statements, which account for 41% of future-oriented sentences.