The central bank is expected to keep interest rates on hold when its Monetary Policy Committee meets on Thursday, nine of 11 economists polled by Reuters said yesterday. “We expect rates to remain on hold given a slightly elevated inflation reading in April, and more importantly, given the sharp increase in global oil prices,” EFG Hermes lead economist Mohamed Abu Basha said. Initial data from the CBE on April inflation figures showed the annual headline inflation rate dropping to 13.1% from 13.3% in March, while core inflation was up fractionally to 11.62% from 11.59%. Detailed inflation figures were due out yesterday. The MPC will also be mulling the likely trajectory of interest rates in the United States, CBE Governor Tarek Amer had said earlier this week.

Fitch takes Moody’s EM debt warning a step further, saying fundamentals don’t matter: Having strong fundamentals does not shield emerging markets from the impact of a stronger USD, the global head of Fitch Ratings’ sovereign ratings, James McCormack, writes for the FT. “A stronger [USD] has been associated with lower sovereign ratings, and vice versa, and turning points have been aligned,” he says. “In fact, exchange rates vs. the USD are very much at the centre of EM fundamentals and will be for as long as the USD is the first choice for EM foreign currency borrowing, the numeraire currency in commodity markets, the leading reserve currency and its exchange rate a prime motivator for EM central bank interventions.” As we noted yesterday, Moody’s had warned that emerging markets can weather a slight shift in exchange rates and interest rates, but would see major fiscal imbalances if these shifts were severe. It placed Egypt and six other countries on its list of high-risk EM sovereigns.

Meanwhile, the JPMorgan Emerging Markets Currency index closed in on its biggest single-day drop in trading in a year and its lowest since last December on Tuesday, according to the FT.

But wait: A debate is apparently raging within the Federal Reserve on how far interest rates should rise. San Francisco Fed President John Williams is of the view that the Fed only has a few more rate hikes to go as the long term drivers of US economic growth support a neutral rate. He called bond-buying an important part of the policy-easing tools that the Fed “is going to have to turn to” to fight future downturns, Reuters reports. This starkly differs from a more optimistic Fed Vice Chairman Randal Quarles, who believes that there’s a bit more room to raise rates without putting the brakes on the economy.

Breakthrough on GERD? The next round of talks on the Grand Ethiopian Renaissance Dam (GERD), which kicked off yesterday, “ended successfully,” according to a tweet this morning by Foreign Ministry spokesperson Ahmed Abou Zaid. The tweet, which leaves little by way of detail, said that the foreign ministers of both countries are expected to sign a declaration of the meeting’s outcomes later as Foreign Minister Sameh Shoukry and General Intelligence Directorate head Abbas Kamel met with Ethiopian Prime Minister Abiy Ahmed in Addis Ababa, where Ahmed reaffirmed country’s commitment to strengthening relations, according to Abou Zaid.

President Abdel Fattah El Sisi is hosting his fifth National Youth Conference today, Al Ahram reports. No details were provided on the location of today’s edition. Organizers have set up a website for citizens to submit questions to which El Sisi will respond during the gathering.

The House of Representatives’ general assembly is now in recess until 3 June, Ahram Gate reports. We believe House committees will still meet during the recess to discuss pressing legislation, including the FY2018-19 state budget.