Beltone: the chances of a 1% rate cut at the August meeting increase

Habi

Beltone Financial predicted that the catalysts of the comparative periods and the strength of the pound would continue to support good annual inflation until the end of the year, which would keep inflation rates within the range. Central target at 9% above or below 3% by the end of 2020, especially in the absence of factors affecting prices and inflation. In the coming period.

In a note published today by the Research Department, she said that fuel prices on the local market would be reviewed by the end of September 2019. One expects to that prices remain unchanged after the strength of the pound, in addition to the current drop in fuel prices below the budget price set at $ 67 per barrel.

She suggested a cut in interest rates by 100 basis points at the next Monetary Policy Committee meeting on August 22, 2019, noting that the Federal Reserve had lowered interest rates by 0.25 per cent. % at the end of July, which would favor the resumption of the monetary easing policy.

"Regarding the second most important element in the interest rate decision, we expect that Treasury yields will remain attractive even after the rate cuts, thanks to the strong pound and rising interest rates. of real interest because of the slowdown in inflation, "Beltone said.

Beltone pointed out that among emerging markets with similar returns, Egypt is still characterized by improved macroeconomic indicators and GDP growth of + 5%.

Beltone Financial said July's inflation figures confirmed that the record low of 9.4% recorded in June 2019, despite its temporary nature, provided sufficient support for expected inflationary pressures, which would have a significant impact on the inflation figures during the second half.

Annual inflation slowed by 8.7% in July, below expectations and 9.4% in June, while monthly inflation rose 1.8%, while forecasts forecast an increase of 2.5% and monthly inflation of 0.8% in May.

The slowdown in the annual inflation rate was supported by a slight increase in food prices of 9%, compared to 10.3% in June, due to the monthly rise in food prices of 0.8% , corresponding to the expectations of "Beltone", with a slight impact of rising fuel prices. On consumer goods.

At the same time, the housing, utilities and transport sectors recorded an increase of 9.8% and 8.7% over the previous year, reflecting the new average increase of 18% in fuel prices and electricity in early July.

Although the monthly increase was highest in both sectors, the 3.3% drop in the consumer price index contributed to a slight rise in overall inflation on a monthly basis.