Cairo – Mubasher: The further sharp rise in Egyptian inflation, to 15.5% y/y in August, is likely to prompt the central bank to hike interest rates at its meeting later this month, said a recent report compiled by Capital Economics.
With further subsidy cuts on the cards and the pound set to fall again, the inflation picture is unlikely to improve any time soon and we expect additional rate hikes over the next twelve months, added the report.
Earlier this week, Capital Economics said Egypt’s currency has suffered several small devaluations since the Arab Spring of 2011. However, a big one, perhaps a 25% decline against the U.S. dollar could come about by late 2017 if central bankers loosen their grip and shift to a more flexible exchange rate as part of a possible $12 billion IMF deal.
