Thursday, June 24, 2021

    Fitch Warms World EconomyOver EM Monetary Policy

    Must read

    Joseph Afam
    Joseph Afam (Local Contents and Partnership Editor) (070 3949 0464) Joseph Afam is a energy and finance journalist, who has years of experience in journalism, he started his journalism career in Nigeria’s top financial newspaper in Lagos. He’s a graduate of Economics and Finance from University of Ebonyi State, Nigeria He has won series of awards and regconitions Contact him for any editorial deals and advertorial issues on #,, Cell: 070 3949 0464

    World Economy

    Thursday, May 17,2018

    E merging market monetary policy settings are on the loose side from the perspective of domestic economic conditions as the US Federal Reserve tightens monetary policy, credit ratings agency Fitch Ratings said late Tuesday.

    These policy settings could tighten by more than the consensus expects as global monetary conditions normalize, according to the latest research from Fitch’s economics team, World Bulletin reported.

    Fitch looked at the monetary policy stance of 10 large emerging markets through the lens of “policy rules” that attempt to describe in a very simplistic fashion how central banks set interest rates in response to domestic economic conditions, namely inflation relative to target and the level of unemployment.

    Fitch’s analysis shows that six of the 10 emerging markets are currently running policies that are looser than would be implied by these simple policy rules: Turkey, China, Poland, Brazil, Indonesia and India. Among these, Turkey is found to have the most overly-accommodative stance using this policy rules-based analysis.

    “Brazil also has an overly-loose policy according to this analysis, although our framework does not factor in the likelihood of a large output gap in Brazil following the recent deep recession there.”

    Fitch noted that emerging market policy rates could see more upwards adjustment than currently expected by financial markets as global monetary conditions normalize.

    This could be exacerbated by any generalized appreciation in the US dollar and associated declines in emerging market capital inflows, according to Fitch.

    “Russia, Mexico and South Africa are running a tight monetary stance relative to their domestic cycle. But the reversal of capital flows and the rising US dollar, in part spurred by the gradual ending of easy money by the Federal Reserve, has deterred these three countries from easing their policies and to remain cautious.

    “Only South Korea is found to have current interest rates broadly in line with what domestic economic conditions would warrant,” it added.


    - Advertisement -spot_img

    More articles

    - Advertisement -spot_img

    Latest article

    WP to LinkedIn Auto Publish Powered By :