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Rising inflation behind decision to keep Egypt rates on hold

The accompanying press release provided little justification as to why, having eased policy at its previoustwo meetings, the Egyptian central bank left interest rates on hold today. We suspect that this was aresponse to the recent rise in inflation. Looking ahead, given the weakness of economic activity, therecould be scope for further cuts in interest rates. But Egypt’s external financing needs will remain a majorrisk, as will the political situation.

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