Impact of U.S. Monetary Policy on Emerging Markets

Emerging market central banks typically align their policies with the U.S. Federal Reserve, particularly as discussions around rate cuts intensify. The current outlook suggests that the Fed may implement a quarter-point cut every quarter in 2025, influenced by persistent U.S. inflation that is declining slower than expected. This cautious approach by the Fed affects decisions made by emerging market central banks, which have varying capacities for rate cuts based on their economic conditions. As a result, the differing inflation trajectories and growth prospects among these markets will impact their monetary policies moving forward.