Egypt’s annual urban or civic consumer price inflation fell to 3.1 percent in October, from 4.8 percent in September, official statistics agency CAPMAS said on Saturday, paving the way for further interest rate cuts by the central bank.

After its annual inflation rate increased to 33 percent in 2017, Egypt is approaching the end of an IMF-backed economic reform programme. Under the terms of the agreement, the nation hike domestic fuel prices in July.

The reforms of the IMF have helped the government take control of the budget deficit, avoiding the need to expand the money supply. This has reduced inflationary pressures in addition.

The Central Bank of Egypt (CBE) made two consecutive cuts of a combined 250 basis points to Egypt’s overnight borrowing and deposit rates in August and September. Deposits are now returning 13.25% and 14.25% of lending.

Analysts predict the CBE to make additional rate cuts before the end of 2019 as inflation declines.

Radwa El-Swaify, head of research at the Cairo-based Pharos Securities Brokerage, said that urban inflation “is slightly lower than our 3.5 percent Year-Over-Year, setting the stage for a 100 bps rate cut on November 14.”


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