The Central Bank of Egypt left key interest rates unchanged on Thursday, as was widely expected. The CBE’s monetary policy committee left overnight deposit and lending rates on hold at 16.75% and 17.75%, respectively, while the main operation and discount rates were also maintained at 17.25%, the CBE said in a statement. Despite the challenging climate as a result of the emerging markets sell-off, the CBE sees that “the pass-through to domestic inflation from developments in emerging market economies remained contained due to stabilization and structural policies that support improving macroeconomic fundamentals.” Most analysts held the view that the MPC would need to keep rates high to preserve Egypt’s competitiveness in the battle for hot money fleeing EM for higher rates (and more stability) in the United States.

CBE says inflation moving as expected: The central bank’s statement said it expects inflation to come in at c.13% in 4Q2018 before dropping to the single digits “after the temporary effect of fiscal supply shock dissipates.” Annual headline inflation climbed to 14.2% in August, up from 13.5% in July, while monthly inflation eased to 1.8% from 2.4%.