Emerging market inflation is still very much front and centre in terms of macro worries, and it may be about to get worse.
While China may be nearing the end of its tightening cycle, the disaster in Japan is likely to create further problems through higher prices for imported goods or exported goods, depending on how quick Japan recovers.
In India, the food and fuel inflation problem is bleeding over into the country’s core, with more rate hikes to come and rising oil prices inflaming an an already difficult situation.
And in Brazil, expectations are rising the inflation situation is going to get worse.
Brazil’s central bank is expected to hike rates one more time, but after that political pressures may stop the bank from continuing the fight, according to Societe Generale’s Alejandro Cuadrado.
And look at those inflation expectations soar as a result, screaming toward Brazil’s 6.5% upward barrier.
Photo: Societe Generale