Emerging markets move to control inflation

With inflation rising globally, Emerging Market central banks have started to normalize interest rate policy, unlike their Developed Market peers who are getting further behind the curve. To date, 15 central banks have started raising rates in an attempt to stabilize inflation and support their currencies. Brazil has been the most aggressive, hiking rates by 425bps so far this year. Is this truly monetary policy tightening? In fact it isn’t. In 2Q21, there were 12 countries in EM that had positive real interest rates. This number has now dwindled to just seven, a disparate group including China, Indonesia, Kazakhstan, Egypt and Vietnam. Regardless, policy is moving in the right direction in EM.