Lessons from the “early hikers”: inflation remains sticky

A handful of EM central banks were quick out of the blocks to tighten monetary policy in 2021 and one of the key lessons of the past year or so is that underlying inflation pressure is still proving incredibly hard to beat. The fight against inflation will take time. We think there is scope for many central banks to start cutting interest rates this year, but those in Emerging Europe and Latin America are likely to keep rates at higher levels than most expect throughout 2023-24.