The proactive fight against inflation

Wells Fargo Research Team Wells Fargo

Summary

Recent inflation data in Brazil and Mexico reveal price trends remain elevated in both countries. For the most part, we can generalize that statement and say inflation across the emerging markets is elevated and not as transitory as emerging market policymakers initially thought. With inflation above target or at the upper end of target ranges in many emerging market countries, in our view central bankers in the developing world do not have the luxury of being patient as it relates to monetary policy. In that sense, we believe currencies associated with proactive central banks can outperform, while patient or reactionary central banks could see their currencies underperform.

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Wells Fargo Research Team

Wells Fargo

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