Interest rate cuts in emerging markets: An avalanche bigger than it has been since the financial crisis

Right away in advance. Please have a look at the following graphic. South Korea is not an emerging market, but the inflation rate for August was 0.00% just this morning. So there is a rapid trend towards deflation in this so important production location in Asia. So soon the interest rates in Seoul will go down as well? In the month of August, interest rate cuts have broken through the planet like avalanches. Emerging markets carried out 8 interest rate cuts in July, and in August there were already 14 net interest rate cuts. This is currently more than it has been since the 2008 financial crisis.


Donald Trump’s criticism of his own central bank is understandable. Interest is falling all over the planet. In all likelihood, the ECB will take a significant step on 12th of September, which will probably be followed by many other Europeans (Switzerland, etc?). Only the USA will become more and more expensive for buyers of US goods with a stronger dollar.

Perhaps Donald Trump’s hardest hit will be the surprising rate cut in Mexico? Well, maybe too many foreign buyers don’t buy their goods in Mexican pesos, but in US dollars? But as a symbol Trump can say: “Look, on the southern border to us interest rates are being lowered, and we? But back to the emerging markets. In terms of interest rate cuts, less important countries for the global economy such as Jamaica, Moldova and Botswana were also involved. But also major players such as Mexico, Turkey, Indonesia, India, Russia and Brazil!

We must also bear in mind that the economic situation in many emerging markets is already pretty bad (we have already reported on this several times). In the eurozone, too, industrial production in particular is already on the retreat. But in the US, the situation is “still” too good – that’s probably how the Fed sees it. As a result, the Dollar is strengthening, and everything against the Dollar is currently tending to weaken. The Euro is also continuing to depreciate in anticipation of the ECB interest rate cut on September 12th.

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