The monetary policy committee (MPC) at the Central Bank of Egypt (CBE) is expected to fix the interest rate during its next meeting on Thursday, according to a report issued by the research department at HC Securities. The Egyptian investment bank expected the CBE to keep the interest rate fixed without changes during its three upcoming meetings in order for the market to accommodate the impact of the first and second cycles of the increase in fuel price. Sarah Saada, macroeconomics analyst at the Research Department at HC Securities, said that while monthly inflation came with an exceptional decline in April, it is expected to increase in May given the increased demand during Ramadan. "We expect an increase in fuel prices by 15-25% in June-July compared to the 31-42% increase of gasoline and diesel fuel in fiscal year 2017/18, which would lead to a higher monthly inflation rate in June and July," Saada further noted. Saada believes that the CBE decision to keep interest rates without changes in March was a conservative move in light of the global economic situation. However, HC Securities expects the CBE to continue its trend toward reducing interest rates by the end of the third or fourth quarter of 2019 with the stability of prices, and yet, the reduction decision remains dependent on the market situation at the time. The MPC has kept interest rates without changes in its last meeting on 28 March 2019 after a reduction of 100 basis points in February 2019. Annual inflation rate slowed down to 13.0% in April, compared to 14.2% in March, while monthly inflation slowed down with the increase of prices by 0.5%, an equivalent of a monthly inflation rate of 6.2%, according to the data of the Central Agency for Public Mobilization and Statistics. Annual core inflation slowed to 8.11% in April, compared to 8.93% the month before, with an increase in the consumer price index to 0.36%, compared to a 0.45% increase in March, according to the CBE.
