Local economic & markets trends still consistent with EM rate cuts
|Summary
Trends in monetary policy have become more localized: rather than a global theme for central banks to respond to (e.g., broadly rising inflation pressures, synchronized economic slowdowns, aggressive Fed tightening, U.S. dollar strength, etc.) local economic and financial market trends are now paramount for policymakers, at least in the emerging markets. In that context, emerging market central banks can still, thematically, cut policy rates and have more room to pursue easing relative to peer institutions in the advanced economies.
At the same time, a fair amount of intra-EM and intra-region divergences should also materialize. Select central banks can cut aggressively (Brazil), some more slowly (Chile & Mexico), while others may start tightening cycles (Colombia). In this report, we update our Monetary Policy Space framework to get a sense of which emerging market central banks have policy space for rate cuts, how much room for cuts is available, and where financial markets may be mispriced and offer opportunities for speculators and hedgers.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.