JP Morgan AM: Cutting cycles are underway across several emerging markets
Central banks in developed markets have largely kept their interest rates steady in recent weeks as they wait for more evidence of a slowdown in inflation. In contrast, several emerging market (EM) central banks have started their rate-cutting cycles with inflation having fallen significantly.
EM central banks were quicker to start their hiking cycles relative to developed market counterparts, and this approach is now paying dividends. With real interest rates in emerging markets significantly higher than those in developed markets, we see room for EM central banks to cut further without needing to fear currency depreciation. This should support economic growth in 2024 and may also provide a boost for EM assets more broadly.