Several emerging markets (EMs) have started to cut interest rates. Brazil and Chile started doing it last month and S&P expects further rate cuts in the near future. This is what we read in the monthly update of S&P Global Ratings on emerging markets, with a particular focus on monetary policies and interest rate trends. The US rating agency also expects Mexico, Colombia and Peru to begin cutting rates early next year, although there is the possibility of an earlier start. It also expects some central and eastern European central banks to start later this year as pressures on exchange rates and inflation have become more supportive of monetary easing.
The months of July and August proved to be volatile for food and oil prices. Saudi Arabia and Russia continued to cut oil production, while the failure to extend the Black Sea Grain Initiative (BSGI) put pressure on corn and wheat prices.
However, S&P experts believe supply risks to emerging markets are lower than last year, as the relevance of Ukraine’s grain exports has declined since the war began. That said, several economies in the Middle East and Africa will be significantly impacted by disruptions in grain supplies.