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Gulf aid and struggling economy prompts Egypt to cut rates

The surprise decision by the Central Bank of Egypt to cut interest rates today was probably triggered by two factors. The first is the influx of aid from the Gulf, which has eased strains in the country’s balance of payments. And the second is the renewed downturn in Egypt’s economy in recent months. Nonetheless, despite the economy’s problems, we doubt that this marks the start of a significant easing cycle.

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