Emerging market policymakers have been in loosening mode in recent months, with our EM interest rate diffusion index showing that more EM central banks cut rates than hiked again in August. Rate cuts since the start of the year have been concentrated in Emerging Asia, where low inflation has given central banks scope to loosen monetary policy, as well as Emerging Europe (namely Turkey and Russia). In contrast, central banks in commodity producing countries in Latin America and Africa, where currency weakness has continued to push up inflation, have raised interest rates over the past few months.
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