Although the Egyptian central bank left interest rates on hold today, there is growing speculation that, following Abdel Fattah al-Sisi’s decisive victory in the recent presidential election, rate cuts could come back onto the agenda. For our part, we’re not convinced. With social tensions high, it seems unlikely that Mr. al-Sisi will be able to restore political stability and push through the reforms needed to boost growth and shore up investor confidence. Accordingly, strains are likely to persist in Egypt’s balance of payments, meaning monetary conditions will remain tight.
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