Cairo – Mubasher: Capital Economics said it expects Egypt’s inflation to climb to more than 20% in the coming months.
Capital Economics’ expectations have followed the Central Bank of Egypt’s decision to float the pound last week, coming alongside a raft of subsidy cuts.
“The impact is likely to be temporary and inflation should start to ease in the middle of next year, but it won’t return to the CBE’s comfort zone of single digits until the latter part of 2018,” noted the report compiled by Capital Economics.
Last week, CBE float the pound; setting an initial rate of EGP13/USD (down 46% from the previous official rate of EGP8.88/USD), with a 10% band limit – letting banks determine the rate.
The CBE also raised the overnight deposit, lending and discount rates by 300bps to 14.75%, 15.75% and 15.25%, respectively.
