NEW YORK CITY—Two central banks, two differentdirections in monetary policy. That was the study in contrastsobserved by Ken McCarthy, Cushman &Wakefield's senior managing director for economic analysis& forecasting, following presentations last week by FederalReserve Chair Janet Yellen and MarioDraghi, president of the European Central Bank. The bottomresult, McCarthy writes: “Interest rates are expected to rise thisyear in the US as the recovery gains momentum and are likely todecline in continental Europe as the need for stimulus remains andinflation continues to decline.”

Yellen accentuated the positive in her testimonybefore Congress' Joint Economic Committee last Wednesday. “I expectthat economic activity will expand at a somewhat faster pace thisyear than it did last year,” she testified, and although Yellencited forces leading to uncertainty as well as tailwinds, heroverall assessment, McCarthy wrote, was that “growth will behealthy enough for the Federal Reserve to continue steadilyreducing its purchases of securities over the next severalmonths.”

At this point, McCarthy writes, “”The economy isable to stand on its own two feet without Fed support and, toextend the analogy, will soon be walking and possibly running. Butthere is still enough worry about slack in the system that there isno need to raise interest rates any time soon.” The best guess atpresent is for the to begin raising rates “about a year from now.The key point is the Fed's monetary policy direction is togradually shift from stimulus to restraint,” with an improvingeconomy the key driver of this ongoing policy shift.