Beltone Investment Bank plans to cut interest rates between 50-100 basis points in the monetary policy committee meeting on March 28, 2019.
In a research report he predicted for several reasons, firstly, the continuation of favorable global conditions in the context of a tightening of monetary policy, which supports the completion of the monetary policy of the Central Bank of Egypt, and secondly , in light of the absence of the auxiliary factors to change the reference year, the inflation starting from the rates of December 2018, which induced the Central Bank of Egypt to postpone the an inflation target of less than 10% in 2021, the general inflation readings are expected to remain hostage to the unstructured food price path resulting from the various market disruptions.
Thirdly, the mission of the central bank is to balance growth and inflation, as well as to support the government's economic reform program, which is an important component of the debt service burden, which represents the 10% of GDP in the 2017/2013 fiscal year, which confirms the renewed appetite of investors, despite the decline in yields on government bonds, which confirms the existence of limited pressure on the local currency – another factor in the decision on interest rates.
There are limited opportunities for future interest rate cuts, as seasonal inflationary pressures will shift to negative real interest rates by the end of the second quarter of 2019, before inflation rates have ended by the end of the year. ;year. In order to strengthen investor confidence, send a strong message of confidence in the current monetary policy and confidence in the local currency path, reducing the economic component of the decision-making process.
Beltone stressed that the high inflation reading does not pose a risk to the inflation outlook, while maintaining his vision of continuing to contain inflationary pressures during the first half of 2019.
Annual inflation rose 14.4% in February compared to an increase of 12.7% in January 2019 and exceeded Beltone's forecasts by 13.5% due to the increase in food prices of the 15.4% compared to an increase of 12.5% in January, which we believe is due to the increase in fruit prices and vegetables by 7.4% on a monthly basis, resulting in an annual increase of 32.7% from 23.7% registered in January 2019.
Meanwhile, all other sectors remained unchanged, with the exception of the apparel and footwear sector up 9.9% compared to 7.6% last month due to a change in 39; reference year.The monthly inflation rate increased by 1.7% compared to 0.6% in January, Core inflation increased by 9.2% from 8.6% % of January.