External developments could prompt emerging market central banks to be more cautious about cutting interest rates. The recent rise in commodity prices, particularly oil, increases the risk of renewed inflationary pressure, particularly for net energy importers. Furthermore, incoming U.S. data, both on activity and inflation, have led to a repricing in the federal funds rate, pushing cuts further out into the future, with a similar impact on benchmark rates in several major EMs, especially in Latin America.
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