EM inflation has continued to fall and is now close to the rates recorded in the late 2010s, which will be welcomed by policymakers. But there are a few important outliers. Inflation looks set to remain high by past standards in Central and Eastern Europe, limiting the scope for interest rate cuts. At the other end of the spectrum, low inflation in China is a symptom of the problems of over-investment and weak demand, and we think the economy will remain in deflation over the coming years.
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