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GRAPHIC-Up, up and away: Emerging market central banks raise rates in April

LONDON, May 6 (Reuters) - Emerging market central banks delivered more rate rises than cuts in April, marking the end of an easing cycle that had started in 2019 as central banks, especially in emerging Europe and central Asia, grapple with rising inflation pressures.

Policy makers across a group of 37 central banks in developing economies delivered a net four interest rate hikes in April after recording a net five increases in March.

“Following the most aggressive monetary easing cycle in EM history since the onset of the pandemic, the tide is now turning, with reflation concerns pushing EM central banks into a more hawkish stance on average,” said Ehsan Khoman, head of emerging markets research at MUFG Bank.

For an interactive version of the graphic, click here tmsnrt.rs/3jSycdO.

The action was concentrated in emerging Europe and central Asia, where Belarus, Ukraine, Russia, Kyrgyzstan, Georgia and Tajikistan all raised their benchmarks - the latter two now offering interest rates close to or in double digits.

“The rate of inflation has picked up in much of the region, prompting monetary policy responses,” Paul Gamble, head of emerging Europe at Fitch Ratings, said in a recent note to clients.

The moves were chiefly driven by food inflation. World food prices rose for a 10th consecutive month in March, hitting their highest level since June 2014.

But lately, rising energy and commodity prices have added to the pain. Many analysts predict more rate hikes ahead in emerging Europe and central Asia, but also in Latin America and elsewhere.

The balance between rate hikes and cuts across the group of 37, by Reuters calculations, was negative or zero for two years up to February 2021, in what was the longest easing cycle since the 2008 financial crisis and the 2010 euro crisis.

At the peak of the cycle in March last year, 27 of the 37 central banks cut interest rates, trying to protect their economies as the fallout from the coronavirus pandemic rippled through markets around the world.

In 2021, there have been nine rate hikes across the group so far, compared to four in the whole of 2020 and nine in 2019.

There have been only three cuts this year, compared to 115 in 2020 and 81 in 2019.

For an interactive version of the graphic below, click here tmsnrt.rs/3xOkpgx.

Reporting by Karin Strohecker; Graphics and data reporting by Ritvik Carvalho; Editing by Kevin Liffey

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