Global monetary policy going separate ways: Fitch

By James Langton | August 24, 2023 | Last updated on October 16, 2023
2 min read

While central bankers in the major developed markets are still combating high inflation by increasing interest rates, some emerging markets are starting to head in the opposite direction, says Fitch Ratings.

In a new report, the rating agency said its index that tracks the direction of interest rates geographically indicates the global interest rate picture is starting to fragment — between emerging and developed markets and within the emerging markets category too.

“The direction of policy interest rates in emerging markets and developed markets is beginning to diverge, with the majority of emerging market central banks keeping rates on hold and some starting to cut rates, while the major developed-market central banks continue to raise them in the face of high and persistent core inflation,” Fitch noted.

The rate picture is diverging among emerging markets too, with most central banks holding steady, but some starting to cut rates, and others still raising them.

“Brazil and Chile have recently cut rates, given their improving inflation outlooks and slowing activity, as past monetary tightening works through the economy,” the report said, and “China recently cut rates again as the economic recovery has lost momentum.”

At the same time, Russia and Turkey have recently raised rates, and rates currently appear to be on hold in markets such as Korea, Indonesia, Mexico, South Africa, India and Poland, it said.

“These moves are likely to fuel expectations of a broader-based easing cycle among emerging markets in the coming months,” Fitch said.

However, it stressed that central bankers in emerging markets will “remain vigilant on inflation given risks from higher food prices, El Niño and, in some countries, still-elevated core inflation rates.”

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James Langton

James is a senior reporter for and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.