Cairo – Mubasher: The Central Bank of Egypt (CBE) is expected to cut its overnight deposit rate by 50 basis points (bps) to 11.75% from 12.25% during its meeting on 26 December, London-based Capital Economics said in a report on Tuesday.

Despite an increase in headline inflation rate to 3.6% year-on-year in November from a 14-year low of 3.1% in October, it remained below the CBE’s target range of 9% plus or minus 3% by the end of 2020.

This will allow the CBE to deliver further interest rate cuts over the coming twelve months as Capital Economics expects CBE to lower interest rates by 225 bps to 10.00% by the end of 2020. 

Since the beginning of 2019, the CBE reduced its interest rates four times by a cumulative of 450 bps. 

“November’s weak inflation reading and signs that price pressures are likely to remain subdued – the price components of the whole economy PMI dropped to its lowest since the survey began in 2011 means that central bank is likely to press ahead with is easing cycle at this month’s meeting,” the report indicated.

The Central Agency for Public Mobilization and Statistics (CAPMAS) on Tuesday announced that the country’s annual inflation rate rose to 2.7% in November from 2.4% a month earlier.