Inflation expectations fall, but reasons for caution

Our dataset on inflation expectations across EMs shows some encouraging falls since 2022 and supports our view that, with EM inflation likely to fall further, monetary easing cycles will start in the coming months. However, inflation expectations remain high compared to pre-pandemic levels and central banks’ targets in most countries. Lowering inflation sustainably will take time and we think that interest rates will remain higher than most expect by end-2024, particularly in Latin America and Emerging Europe.