Egypt’s easing cycle likely to start in late-2017

The statement accompanying last night’s decision by Egypt’s central bank to leave interest rates on hold suggests that, with inflation now falling, policymakers are trying to downplay expectations that monetary easing will quickly follow. Accordingly, a rate cut at the next MPC meeting in November seems unlikely. But with inflation set to plunge by as much as 10%-pts over the coming months, an easing cycle should get underway in December and we think interest rates will fall further than most expect in 2018-19.