Emerging Market Rate Cutting Cycle Nearing An End, Capital Economics Says

Posted by EM_Equity ⋅ July 22, 2015 ⋅ Leave a comment

Filed Under Asia, BRICS, central banks, economic growth, Economy, EM, Emerging Asia, Emerging Markets, Eurasia, India, Inflation, interest rates, investing, Latam, LATIN AMERICA, Oil, Oil prices, rate cut, Rate Cut Cycle, Russia

The interest rate cutting cycle in emerging market (EM) nations is nearing an end, Capital Economics says.

So far in July, more EM Central Banks have hiked interest rates than have cut rates – which is the first time that this has happened since in December 2014.

Capital Economics says that they expect to see further policy rate cuts in a few more EMs before the end of this year, notably India and Russia.

However, Capital Economics believes that the majority of EMs will likely experience a pick-up in inflation as the effects of last year’s fall in oil prices unwind and that the next move by most Central Banks will likely be a hike versus a cut.

That said, Capital Economics does not expect a big upswing in inflation, and accordingly, the pace of tightening in most countries is likely to be relatively gradual.