Emerging Markets' C.banks to largely keep rates low

The recent fall in oil prices notwithstanding, the outlook around inflation has been improving of late. The trend in headline inflation (3m averages normalized) has largely bottomed in regions where central banks have recently turned dovish and cut rates (Asia and EMEA). 

Although inflation looks to stabilizing, the market seems to have been over-optimistic in how quickly inflation may revert. The inflation surprises (over a 3m look back window, again normalized) have turned negative across the different regions. 

"Weak inflation outturns plus the recent fall in oil/commodity prices and subdued growth suggest that EM central banks will largely keep policy rates at low levels and tolerate FX depreciation", says Barclays.