EXCLUSIVE- Enterprise poll of economists sees CBE leaving interest rates unchanged on Thursday: The central bank will likely keep its key interest rates on hold when its monetary policy committee meets on Thursday, an Enterprise poll of 10 economists found. Citing a recent drop in inflation, the economists and analysts we surveyed said they expect the CBE to leave its overnight deposit and lending rates at 16.75% and 17.75%, respectively, at the 27 December meeting.

Weathering the (EM) storm: Nobody really expected an interest rate hike heading into Thursday. Instead, the question was whether the CBE might surprise the market with an early rate cut as inflation dropped to 15.7% in November from 17.7% the previous month, falling back into the government’s targeted range of 13% (+/- 3%). Don’t hold your breath: The CBE will hold off on a cut to help maintain foreign appetite for Egyptian treasuries, the economists said.

“The CBE will not be encouraged to resume its easing cycle given the ongoing turbulence of the emerging markets, which has dealt a hard blow to foreign holdings in Egypt’s treasuries,” said Pharos Holding’ Radwa El Swaify. Foreigners held Egyptian treasuries worth a total of USD 11.7 bn as of the end of October, down from a high of USD 21.5 bn in March — and off from the USD 13.1 bn recorded at the end of September, CBE data showed.

Let’s not forget that the US Federal Reserve raised its benchmark overnight lending rate last week, which could lead to more capital outflows from EM.

When will easing begin, then? Not before the dark cloud over emerging markets passes. “We generally see no interest rate cuts before 4Q2019, when the emerging markets are forecast to stabilize and Egypt’s inflation cools down after a new wave of price hikes follows the final round of subsidy cuts expected towards the end of the current fiscal year,” said EFG Hermes’ Mohamed Abu Basha. While both El Swaify and Abu Basha said they expect no rate cuts before 4Q2019, Capital Economics’ Jason Tuvey predicts the easing cycle could begin in early 2019.

Friendly reminder: Let’s not forget thatNovember inflation figures don’t reflect the impact of the government’s recent decision to scrap the discounted customs exchange rate for non-essential imports — a decision that economists told us could send inflation up by as much as 1 percentage point in the next reading.