{"id":604236,"date":"2023-08-28T00:00:00","date_gmt":"2023-08-28T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/2023\/08\/28\/risks-for-emerging-markets-grow-as-central-banks-diverge\/"},"modified":"2023-08-28T00:00:00","modified_gmt":"2023-08-28T00:00:00","slug":"risks-for-emerging-markets-grow-as-central-banks-diverge","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/egypt\/2023\/08\/28\/risks-for-emerging-markets-grow-as-central-banks-diverge\/","title":{"rendered":"Risks for emerging markets grow as central banks diverge"},"content":{"rendered":"

EMs are not ready for further Fed rate hikes: <\/strong>Emerging markets, including Brazil, Chile, and China have started reversing their steep rate hikes, putting the asset class at greater risk should the US Federal Reserve raise interest rates further than expected in the coming months, Reuters<\/a> wrote. <\/p>\n

This is what the IMF\u2019s chief economist, Pierre-Olivier Gourinchas, had to say: <\/strong> \u201cIf we get to a point where there is a need for \u2026 doing more than what's already priced in, at some point markets might start getting nervous ... Then you see a big increase in the risk premia in different asset classes including emerging markets, including the rest of the world \u2026 The risk of a financial tightening, a very sharp financial tightening, I think we cannot rule that out.\u201d<\/p>\n

Higher for longer? <\/strong> In a highly anticipated speech last week, Fed chair Jerome Powell left the<\/a> door open<\/a> to further rate hikes in the coming months in order to get inflation down to target. Last month\u2019s weaker-than-expected inflation data had fuelled expectations that the central bank would soon bring its tightening cycle to an end and offer guidance about when it could begin to lower rates. The sell-off in the bond market accelerated in the days before the speech, pushing yields to their highest levels since 2007<\/a>, as investors bet that the Fed will wait longer before beginning to cut rates. <\/p>\n

ALSO WORTH NOTING- <\/strong><\/p>\n