HC Securities & Investment expected the CBE to keep the current interest rates based on its projections for January's annual headline inflation rate of 5.2 percent, which is near the lower end of the CBE's new target range of 7 percent (+/-2 percent). Following the MPC's meeting in December, the CBE reset its inflation target to be at 7 percent (±2 percentage points) on average during the fourth quarter of 2022, down from 9 percent (±3 percentage points) on average that was targeted for the same quarter. The CBE explained the action was made to continue to support macroeconomic stability. Yet, HC perceived upward interest rate pressures, as was manifested in rising yields and relatively weaker coverage in the last government T-bill and T-bond auctions. "In this regard, we note that Egyptian treasuries are now facing higher competition from Turkey, which increased its policy rates by 2 percent (200 bps) on 24 December, taking its 15M treasuries to 15.97 percent, up from an implied rate of 10.66 percent previously", according to Monette Doss, head of HC's macro and financials.
