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Fed’s Shift Is Temporary Boon for Emerging Market Central Banks

  • EM central banks can’t allow inflation to run hot, unlike Fed
  • Weaker dollar hasn’t really helped some EMs: JPMorgan Asset
fed building
Photographer: Andrew Harrer/Bloomberg

The Federal Reserve’s move to an extended era of low interest rates offers an opportunity for emerging economy central banks to do the same.

While the impact will vary by country, lower for longer U.S. interest rates and a weaker dollar will boost emerging market assets and take pressure off monetary authorities to raise interest rates in order to protect their currencies or to attract foreign capital.