{"id":2598,"date":"2008-06-06T09:55:34","date_gmt":"2008-06-06T09:55:34","guid":{"rendered":"https:\/\/mmm.9dotdigital.ca\/?p=2598"},"modified":"2025-03-27T15:48:39","modified_gmt":"2025-03-27T15:48:39","slug":"further-policy-tightening-likely-in-emerging-markets","status":"publish","type":"post","link":"https:\/\/mmm.9dotdigital.ca\/?p=2598","title":{"rendered":"Further policy tightening likely in emerging markets"},"content":{"rendered":"<p>ECB President Trichet yesterday warned of a possible July rate rise, in line with the hawkish message from my ECB-ometer &ndash; see <a href=\"http:\/\/www.moneymovesmarkets.com\/journal\/2008\/5\/30\/ecb-ometer-suggesting-rate-hike-more-likely-than-cut.html\">here<\/a>. Any increase is unlikely to mark the start of a new trend, however. One reason is that the ECB&rsquo;s policy stance is already reasonably restrictive &ndash; the current repo rate still exceeds headline CPI inflation and is comfortably above the core rate (i.e. excluding food and energy). <\/p>\n<p>The same cannot be said of the US and many emerging markets. The chart below shows weighted averages of short-term interest rates and CPI inflation in our &ldquo;E7&rdquo; grouping of major emerging economies (Brazil, Russia, India, China, Korea, Taiwan, Mexico). Central banks in these countries are in tightening mode but in most cases look well &ldquo;behind the curve&rdquo; (exception: Brazil). Officials are reluctant to move aggressively partly for fear of excessive currency strength given the super-low level of US rates. <\/p>\n<p>The Fed&rsquo;s maxi-ease is creating global not just domestic inflationary headaches.<\/p>\n<p><span class=\"full-image-float-none\"><img decoding=\"async\" style=\"width: 500px; height: 300px\" alt=\"E7_short_term_interest_rate.jpg\" src=\"\/storage\/E7_short_term_interest_rate.jpg\" \/><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>ECB President Trichet yesterday warned of a possible July rate rise, in line with the hawkish message from my ECB-ometer &ndash; see here. Any increase is unlikely to mark the start of a new trend, however. One reason is that the ECB&rsquo;s policy stance is already reasonably restrictive &ndash; the current repo rate still exceeds [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-2598","post","type-post","status-publish","format-standard","hentry","category-money-moves-markets"],"_links":{"self":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/2598","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=2598"}],"version-history":[{"count":1,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/2598\/revisions"}],"predecessor-version":[{"id":4907,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/2598\/revisions\/4907"}],"wp:attachment":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=2598"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=2598"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=2598"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}