Egypt: weak inflation spurs another aggressive rate cut

The Central Bank of Egypt shrugged off the market volatility following recent protests across the country and lowered interest rates by another 100bp, to 13.25%, at today’s meeting. So long as the protests don’t escalate, weak inflation pressures mean that the easing cycle is likely to be deeper than most currently anticipate over the next twelve to eighteen months. We now expect the overnight deposit rate to end this year at 12.25% (previously 13.00%) and be cut to 10.00% by end-2020 (previously 10.75%).