EM policymakers unlikely to follow China’s lead

There is little reason to think that the decision by the People’s Bank of China to lower interest rates will trigger a spate of copycat responses from other EM central banks. China’s capital account is closed, so the impact on flows to and from other EMs and on currencies is likely to be limited. At the same time, the rate cut is unlikely to radically alter the outlook for growth in China itself – meaning that the knock-on effects to other EMs are likely to be small.