EM monetary policies normalisation as the low tide is getting higher

The monetary policy conditions in the emerging markets are still definitely dovish. Domestic factors as Inflation and, in certain cases, strong economic rebound are driving the EM Central Banks to normalise their monetary policy course. Tighter global financial conditions should trigger a faster and more generalised normalisation.

While limited to a couple of countries, monetary policy (MP) in emerging markets (EM) started changing course in March 2021. In the same week, Banco Central do Brazil (BCB) raised the Selic Rate more than expected, by 75bps, and the Central Bank of Russia (CBR) raised its policy Rates earlier than expected, by 25bps.

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