Entries for 2022

Monetary policy operates with long lags, … as it takes time for tighter financial conditions, … to feed through into weaker growth and lower inflati...

Higher inflation in Chile reflects multiple factors. Demand pressure has eased but remains high. Currency depreciation has offset falling global commodity prices and extended the tightening cycle. Inflation in 2022 is likely to remain above 10% y/y even with a more favorable sequential path in H2.

Indonesia has faced less pressure than other ASEAN countries. Favorable terms of trade and fiscal subsidies helped contain energy prices. Bank Indonesia can afford to be patient with hikes as core CPI remains moderate. Policy normalization through term structure and government bond sales, should help ease capital outflow pressures amid global tightening.

El Salvador’s funding gap through the January bond payment, …  could be 4% of GDP in the mild scenario we presented last week. Already falling rollo...

Markets greeted last week’s Fed meeting with relief, … because the Fed signaled that it is now closer to “neutral,” … with markets inferring less ur...

Portfolio flows to EM stood at -$9.8 bn in July. Equity and debt flows were -$1.0 bn and -$8.8 bn. Chinese equities posted $3.5 bn in outflows.

We discuss potential external financing gaps in frontier markets, … focusing on countries that face external bond redemptions soon. We see financing...

Second edition of the Digital Finance Download

The Colombian peso has seen a plunge this year amid global and local factors. External and fiscal imbalances remain wide despite a windfall from commodity exports. Uncertain policy plans of the incoming administration have exacerbated FX pressure.

China’s banking sector has expanded rapidly in the past decade, with a brief pause in 2018-19 due to deleveraging efforts. It is also competitive globally, with one of the lowest cost ratios. However, banks’ returns and interest margins have deteriorated, and credit risk remains elevated.

In the first months after Russia invaded Ukraine, … the Dollar was relatively stable against emerging markets, … as rising commodity prices split em...

Load shedding reached new record highs in recent months, with more to come. High-frequency data already reflect the impact on major sectors of the economy. With electricity problems persisting in July and expected to extend into the fall, overall economic activity likely fell markedly in Q2 and will decline further in Q3. Inflation probably peaked in June, but is expected to remain above 6% over H2, which will keep pressure on the SARB to continue tightening monetary policy.

Many frontier markets have lost bond market access, … but have to meet sizable external financing needs soon. We estimate such funding needs for six...