Allianz Trade analysts recalled that the process of reducing interest rates in emerging economies began in mid-2023, and its intensity was particularly visible from the beginning of 2024 to mid-2025. They pointed out that Poland stands out from other countries because the process of easing monetary policy is progressing there as expected, without a major impact of both external and internal factors, such as inflation.
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A clear division
The report shows that of the 27 major central banks in emerging markets analyzed, as many as 25 are still in the interest rate reduction phase. However, there is a clear division between countries that are actively continuing to ease monetary policy, such as Mexico, Poland, South Africa, the Philippines and Egypt, and those that have largely completed this process or encounter barriers to its further implementation. These obstacles include, among others: persistent inflation and restrictions resulting from local economic conditions.
Analysts stressed that domestic factors, including inflationary pressures, forced some central banks, particularly in Central and Eastern Europe and Latin America, to adopt a more restrictive approach than originally expected. According to experts, high core inflation, wage growth, tight labor market situation and imported inflation remain challenges, despite the global disinflationary trend.
1/3 exceeded forecasts
Experts also noted that one third of central banks eased monetary policy more than expected. Favorable external factors, such as the weakening of the dollar by 10%. this year or the easing of policy by the US Fed, had a particular impact on the decisions of banks in South and Southeast Asia and Mexico.
At the same time, almost half of banks from emerging markets, especially in Central and Eastern Europe and Latin America, eased monetary policy to a lesser extent than expected. According to analysts, this is due to local factors such as inflation, fiscal constraints and political uncertainty.
There is a slowdown in the forecast
Allianz Trade forecasts a further slowdown in the pace of monetary policy easing in emerging markets until 2026. In the longer term, more and more countries are approaching terminal interest rate levels.
In Poland, the Monetary Policy Council last week reduced interest rates for the sixth time in 2025. As a result, the reference rate of the National Bank of Poland decreased this year from 5.75%. to 4 percent, which means a reduction of 175 basis points.
