EM rate cuts on the horizon as inflation trends down

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After a significant decline in emerging market (EM) headline inflation in the first half of the year, we can expect a more visible slowing of core inflation in the second half. EM central banks have broadly come to the end of their tightening cycles, but they need a few factors in place before they can start cutting rates. A slow and steady rate cutting environment combined with reasonable EM growth should be positive for EM local currency debt.

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