Beltone Financial announced in a recent report that it still maintains its view of a stable interest rates environment in the upcoming Monetary Policy Committee meeting of the Central Bank of Egypt (CBE) on 27 December.
“Treasury yields are persistently elevated, above the pre-interest rates cut, disregarding the interest rates policy direction,” the report stated.
Beltone expects yields to remain above 19%, which will keep Egypt’s fixed income market attractive amidst the tightened monetary policy environment in the emerging markets.
In terms of inflation, the November annual headline inflation decelerated to 15.7%, down from October’s reading of 17.7% and below Beltone`s estimates of 17.5%.
“This was driven by a lower rise of 18.7% in food prices, down from 20.2% in October, which we attribute to the slowed rise in fruits and vegetables prices, 47.9%, down from a peak of 52.7% in October. Food inflation was coupled with the slowdown in tobacco and alcohol prices with a rise of 10.2% against 22.9% in October. Annual core inflation eased as well to 7.94%, down from 8.86% in October,” according to Beltone.
On a monthly basis, the headline inflation rate declined by 0.8% in November, against an increased of 2.6% in October and Beltone’s estimates of an increase of 0.8%. Likewise, core inflation saw a slowed increase of 0.46% month-over-month, against a rise of 1% in October.
This was driven by a decline in food prices by 1.8%, against a rise of 3.5% in October with the 5.8% decline in fruits and vegetables prices.
“We believe the ease in inflation levels confirms the CBE’s view of contained inflationary pressures
bringing the fourth quarter (Q4) of 2018 average inflation reading to the CBE’s target zone upper bond (16%),” the report forecasted.