The latest EM central bank meetings confirmed that policymakers in Emerging Europe and Latin America are still focused on high and rising inflation, rather than any downside risk to the economic outlook from the Omicron variant. Central banks in Brazil, Hungary, Poland and Peru tightened monetary policy aggressively this week, and we expect that policymakers in Russia, Chile and Colombia will follow suit next week. Lower inflation in much Asia gives policymakers there more leeway. If anything, the Omicron variant reinforces our view that interest rates in most of Asia will stay low for longer than most currently anticipate.
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