Cheaper commodities to allow rates to stay lower for longer

We estimate that the recent fall in commodity prices could knock 1%-pt off Emerging Market (EM) inflation over the coming months. With slower economic growth set to keep a lid on core inflation in most countries, the emerging world looks set for a continued period of relatively low and stable inflation. This supports our view that, in general, EM interest rates will be lower in a year’s time than the market currently expects.