- Rate cuts are already underway in some EM economies
- Rapid response bolsters EM central bank credibility
Turkey’s unorthodox interest rate policy and China’s tentative interest rate cuts have made headlines recently – including in the economics section of the Investors’ Chronicle. Both are interesting cases in that they are rather unusual. Turkey has been following its own brand of Erdoğan-onomics, while China operates capital controls, leaving it less influenced by global monetary policy trends.
Take a wider look at emerging market (EM) monetary policy, and these start to look like the exception, rather than the rule. In many cases, EM central banks attacked inflation on this occasion – perhaps scarred by previous episodes – by moving hard and fast. And it seems to be working.