EM central banks loosen policy in spite of Fed tapering

Despite concerns that the US Fed’s tapering of its asset purchases may force EM policymakers to hike interest rates, more EM central banks have loosened monetary policy over the past six months than have tightened. And while many EMs may now be nearing the end of the current easing cycle, we think policy should remain relatively loose over the next couple of years. The key exceptions will be the large BRIC economies and countries with large current account deficits.