Inflation and second-round effects in emerging countries motivate rate hikes that obstruct growth: Moody’s

The pressures generated by the inflation and its second-round effects in emerging economies, will motivate a tightening of monetary policy that generates downward pressure for its economic recovery, warned analysts from the economic research area at Moody’s.

According to them, the central banks of Brazil, Mexico and Russia They lead rate hikes by recognizing that inflation is far from their inflation targets. In an analysis that does not have a rating impact, they estimate that inflation in Brazil will close the year with a fluctuation of 9%, which is almost triple their specific target of 3.75% (+/- 1.5 percent).

Then there would be the Mexican inflationor, which they project will be located at 6.2%, doubling the specific objective of 3% (+/- 1%) and Russia, which they forecast a fluctuation of 6% that is above the central bank’s 4% objective.

Recognizing this inflationary pressure and the reaction of the central bank, the agency’s experts adjusted their expectations for the Gross Domestic Product.

For Mexico, they forecast that it will achieve a growth of 5.5% this year that will moderate to 3% by 2022.

Both expectations incorporate adjustments from the 5.6% forecast in June for this year and the 2.9% estimated for 2022.