Oil remains key to emerging market price stability
Research into emerging markets by Raiffeisen Capital Management suggests that although rates of inflation are falling and signs of economic pickup are improving, there is a danger that higher oil prices could force a monetary tightening.
Raiffeisen notes, for example, that Brazil’s central bank has moved towards rate cuts below 10% in the first half of 2012. this comes after the country was forced to intervene in currency markets because of sharp appreciation in the Brazilian real.
Elsewhere, in Poland there are signs of economic growth coupled with falling annualised inflation in February. There the local currency, the zloty, has appreciated, which Raiffeisen said could “have a positive impact on inflation in the months to come.”
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