Asset classes

Why the outlook for rates is attractive in emerging markets

August 09, 2022

Reasons for optimism
Differences in goods and services consumption patterns have contributed to higher EM inflation.
In general, central banks in emerging markets have been proactively hiking.

Some EMs have done more of the heavy lifting on interest rates than others

This chart shows the level of rate hikes priced in for various emerging markets countries as of August 2022. Russia is the only emerging markets country that has raised rates well below the one-year implied forward policy rate. The Czech Republic and Chile have raised rates roughly in line with the one-year implied forward policy rate. China, Thailand, Malaysia, India, South Africa, Mexico, South Korea, the Philippines, Colombia, Poland, Hungary, and Brazil have hiked rates above the one-year implied forward policy rate.
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