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15 July 2013

Weekly investor research

15 July 2013

Against the backdrop of a re-pricing of US rates a number of Emerging Markets central banks this week reviewed their monetary policies. Prominence was given to the 50bps of hikes implemented by Indonesia and Brazil, but the main message from Emerging Markets last week was in fact that everything is cool. Russia, Malaysia, Chile, South Korea, Peru and Mexico’s central banks all left rates unchanged. Hence the notion that rate changes in the US and other developed markets dictate policy rates in Emerging Markets was shown, once more, to be out of touch with reality in the majority of Emerging Markets countries. Monetary policy is mainly determined by growth and inflation, neither of which have changed a great deal. Only those countries that have been less than prudent with their macroeconomic management now find themselves scrambling to assert their relative policy independence.

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