Inflation threats to slow but not stop EM easing cycle

Rising food prices have already led to upside inflation surprises in parts of Asia, and central banks in the region are likely to ease policy later than their EM peers. But inflation should eventually resume its downward path and, once it does, policy rates will get to neutral levels quickly. In contrast, with strong wage growth propping up core inflation in part of Central and Eastern Europe and Latin America, it will take much longer for policy rates to reach neutral levels in those regions.