Cairo – Mubasher: Egypt’s core inflation has sharply declined in December 2017, which may push the Central Bank of Egypt (CBE) to cut interest rates during the next monetary policy meeting in February 2018, according to a recent report by Capital Economics on Wednesday.
The London-based economics research consultancy forecast inflation and interest rates to fall further than estimated over the next couple of years.
Inflation is likely to fall near to single digits by the end of this year, which should pave the way for interest rates to be cut further to 13.75%, Capital Economics highlighted.
The economics firm has lowered the overnight deposit rate by 100 points to 17.75%, according to the report.
Given that Egypt’s annual inflation fell due to the devaluation of the Egyptian pound, higher prices, and the value-added tax (VAT).
In November 2016, the CBE liberalised the exchange rate of the EGP to drop by 50% against the US dollar.
The CBE has had to raise key rates following the flotation of the local currency in November 2016, by a combined 7%, or at 3% in November, 2% in May, and 2% in July.
