The US Federal Reserve’s (Fed) cut in interest rates last month is expected to generate a positive tailwind for emerging market (EM) equities as lower US rates and a potential US dollar weakening have historically created a favourable backdrop for riskier EM assets.
The US Fed has reduced the benchmark federal funds rate to between 4.75% and 5%. While this first move is now done, the scale of more cuts remains open to debate. Still, it signals that the US Fed is winning its fight against inflation.
