Fed’s room to hike spells trouble for EMs – Scotiabank
Central banks’ interest rate tightening will make it hard for emerging markets with large deficits
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The Federal Reserve still has room to raise interest rates before hitting the top of the hiking cycle, suggesting more volatility could reach emerging market (EM) countries in the near term.
As the US central bank works its way to that sweet spot where rates neither stimulate nor decrease growth, the currencies of the more structurally sound EMs are expected to outperform peers carrying large current account deficits and fiscal shortfalls, says Shaun Osborne
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