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Orthodox vs. heterodox policies and unintended consequences

Weekly investor research

22 March 2021

Emerging Markets’ (EM) central banks adopted a more orthodox monetary policy stance with Brazil, Russia and Turkey hiking interest rates by a larger magnitude than expected by the consensus. The G7 agreed to boost special drawing rights (SDR) reserves available to IMF members by USD 650bn, supporting EM. After taking a step towards orthodoxy, Turkey subsequently took two steps back as President Erdogan fired the central bank governor. Egypt kept its policy rate unchanged. The Mexican president threatened to change the constitution after the Supreme Court blocked a misguided energy reform. In Colombia, the tax committee in the parliament unveiled a tax reform proposal.

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