HC Securities & Investment expects the Central Bank of Egypt's (CBE) Monetary Policy Committee (MPC) to cut interest rates by 100 basis points (bps) during its meeting next Thursday. According to HC Securities & Investment, the headline inflation continued to decelerate over three consecutive month from its high level in May at 14.1 percent, with August monthly inflation coming in lower than expected 1% percent m-o-m. Economist and banking analyst at HC, Monette Doss said, "We see inflationary pressures largely subsiding following the July subsidy cuts. Yearly inflation dropped below 9% y-o-y, well within the CBE target of 9% (± 3%) in 4Q20, providing room for the CBE to proceed with monetary easing to stimulate economic growth and stock market activity. “Moreover, in the global context of monetary easing, with the European Central Bank (ECB) cutting its deposit rate by 10bps to -0.5% last week, Egyptian treasuries continue to provide attractive return and encourage carry trade. That said, we expect the CBE to cut rates by 100 bps in its upcoming meeting.", she said. It is worth mentioning that the Central bank of Egypt's (CBE) Monetary Policy Committee (MPC) at its last meeting on 22 August 2019 reduced policy rates by 150 bps after keeping them unchanged for 3 consecutive meetings since the last 100 bps rate cut in February 2019
