When Federal Reserve Chairman Jay Powell said in December that the central bank's reduction of its balance sheet was on autopilot, global markets balked. When he later walked back that statement at the annual meeting of the American Economic Association and assured that the Fed “wouldn’t hesitate” to alter its balance sheet policy if needed, investors cheered. Few markets have gyrated on the comings and goings of this so-called "quantitative tightening" as wildly as emerging markets. As primary beneficiaries of its counterpart, quantitative easing, in the aftermath of the financial crisis, and the subsequent reach for yield as interest rates in developed economies fell, the fate of emerging markets is tethered quite closely to decisions made by the Federal Reserve. Despite Powell's new
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When Federal Reserve Chairman Jay Powell said in December that the central bank's reduction of...