Interest rates in emerging markets start to diverge, says Fitch

By Ovunc Kutlu

ISTANBUL (AA) - The direction of policy interest rates in emerging markets has begun to diverge, Fitch Ratings said in a report late Thursday.

The majority of central banks in emerging markets are either keeping interest rates on hold, while some are starting to cut rates, it said.

"Policy rates look to be on hold in Korea, Indonesia, Mexico, South Africa, India and Poland for now, while Brazil and Chile have recently cut rates, given their improving inflation outlooks and slowing activity, as past monetary tightening works through the economy," it added.

Central banks in developed countries, on the other hand, continue to raise interest rates due to high and persistent core inflation, the report added.

The US-based global rating agency, however, noted that central banks in emerging markets "remain vigilant" on inflation, due to risks stemming from high food prices and still-elevated core inflation rates in some countries.