(Bloomberg) -- Emerging-market currencies declined and stocks trimmed gains after hotter-than-expected US inflation numbers curbed bets that the Federal Reserve will cut interest rates. 

MSCI’s gauge of developing currencies fell as much as 0.4%, before paring losses at close. The index for stocks erased gains of as much as 0.7% to trade flat before closing 0.2% higher on end-of-day adjustments. 

The moves came after data released Wednesday showed US consumer prices rose more than expected in March. That, coupled with recent labor market reports, makes it more likely the Fed will keep rates “higher-for-longer,” said Henrik Gullberg, macro economist at Coex Partners Ltd.

“It’s bad news for EM and risk assets,” he said. “Also, it increases the risk of a more pronounced downturn in the US and global economy.”

Read more: US Core CPI Tops Forecasts Again, Likely Delaying Fed Rate Cuts

JPMorgan Chase & Co shifted its stance on emerging-market currencies and bonds, as these assets are “unlikely” to withstand a larger reassessment of the Fed’s policy path, analysts wrote in a note. 

“The broadening in global growth and EM’s lack of inflation upturn are important offsets, but in the near-term are unlikely to be sufficient to cause EM to rally,” wrote analysts including Jonny Goulden, Saad Siddiqui and Tales Padiha.

Read more: Traders See Fed Waiting Until After Summer to Cut as Yields Soar

Most currencies slid, with the South African rand, Brazilian real and Chilean peso among those leading losses. Mexican peso weakened 0.8% to around 16.50 per dollar before paring losses, as most Latin American currencies underperformed emerging peers. 

The rand slumped as much as 1.9% amid the global selloff mood, and was also weighed down by the latest opinion poll showing that support for the ruling African National Congress has plunged below 30% in next month’s election. The currency posted the biggest intraday drop in over two months. 

Early in the day, Brazil’s annual inflation rate eased more than expected, boosting bets that the central bank will continue cutting its benchmark rate. 

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