What will a tapering of QE3 mean for EM interest rates?

The sell-off in EM currencies that has followed the Fed’s signal that it may start to taper its asset purchases under QE3 has led central banks in India, Indonesia and now Turkey to hike interest rates. But these countries are probably exceptions within the emerging world. While other EMs are likely to tighten policy in 2014-15, rate hikes are likely to be modest and driven by domestic concerns.

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