Easing cycles have further to run in several frontier markets

The past month has brought aggressive monetary easing in a handful of frontier markets, and we think others will follow suit over the rest of this year. Cuts in policy interest rates this month in Ukraine and Argentina, of 150bp and 450bp respectively, came as the effects of previous sharp currency falls have started to unwind. In Ukraine, the fading impact of the sharp fall in thehryvnia has already shown up in a decline in inflation, and we expect additional rate cuts in the coming months. In contrast, we’re not as confident as the Argentine central bank that inflation has passed a peak, and further easing may be more modest.