According to CI Capital, the CBE’s decision to keep policy rates unchanged following the 0.25% hike by the Federal Reserve System (FED) this month illustrates the independence of the new monetary regime adopted by Egyptian authorities. According to CI Capital, this recovery is expected to continue throughout 2017, albeit at a slower rate, mainly driven by the expected gradual appreciation in the exchange rate and a lower policy rate expected in H2 2017. The CBE maintaining rates despite the high inflation rates recorded in February 2017 (30% and 33% respectively), are in line with CI Capital’s assumptions. Moreover, it is expected that the CBE will gradually start to cut policy rates in Q2 2017. Thus, CI Capital predicts that the 6% hike in policy rates undertaken since 2015 will be fully neutralised in FY 17/18.

Source: Daily News Egypt April 01, 2017 16:07 UTC