The rise in commodity prices caused by the war in Ukraine will push up EM inflation and there are further upside risks from weakening currencies and potential supply chain disruptions. In terms of the policy response, central banks that are focused on tackling high inflation (particularly in Emerging Europe and Latin America) may be compelled to hike interest rates further. But central banks in EMs where inflation is low and economic recoveries are weak (particularly South East Asia) may delay policy normalisation.
EM Drop-In (Thur. 3 March, 15:00 GMT): We’re discussing the impact of Russia-Ukraine on emerging markets in a special 20-minute briefing this Thursday. Registration details.
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