EXCLUSIVE- Enterprise poll of economists sees CBE leaving interest rates on hold: The central bank is expected to leave its key interest rates on hold when its monetary policy committee meets on Thursday, an Enterprise poll of economists and research houses found. Survey participants expect the CBE will leave its overnight deposit rate and overnight lending at 16.75% and 17.75%, respectively, at the 15 November meeting, 10 economists said.

Look beyond inflation: It’s all about stemming outflows of hot money. Say what you want about higher-than-expected inflation in October: The economists we surveyed see the central bank moving to ease pressure on the EGP by giving hot-money investors more incentive to stay in Egypt. All 10 analysts polled say stemming the tide of outflows in a turbulent period for emerging markets would drive policy this Thursday: EM turbulence and a strong USD will keep interest rates on hold, said Ahmed Shams El Din, head of research at EFG Hermes. Multiples Group’s Omar El-Shenety takes it one step further, saying that protecting the EGP and the exchange rate is now among the CBE’s top policy priorities.

Just to keep it in perspective, foreign holdings in Egypt’s treasuries fell to USD 13.1 bn by the end of September, from a high of USD 21.5 bn in March, said Pharos Holding head of research Radwa El Swaify. Egypt has basically lost USD 8.4 bn in outflows between April and September, she noted.

Spike in inflation should not be cause for concern: Most of the analysts with whom we spoke underplayed the spike in annual headline inflation, which rose to 17.5% in October, up from 16% the previous month on the back of hikes in vegetable prices and school fees, state statistics agency CAPMAS said over the weekend. Despite headline inflation being well above the CBE’s announced target of 13% (+/-3%) by 4Q2018, “the elevated headline inflation readings over the past few months, including October’s, come against a largely benign underlying inflation position,” EFG Hermes said in a research note on Sunday. “We don’t see the rise in annual headline inflation as alarming, as it is driven by seasonal factors that will subside,” said lead economist at Beltone Financial Alia Mamdouh.

Annual core inflation rose to 8.86% in October from 8.55% in September, the CBE said on Sunday.

How much longer will we live with high interest rates? Beltone’s Mamdouh sees corridor rates remaining on hold until 1H2019. Pharos’ El Swaify expects the CBE will keep interest rates on hold until 3Q2019, to ensure that the emerging market turbulence has settled and that the impact of the subsidy cuts widely expected in July 2019 has passed. Capital Economics’ Jason Tuvey wouldn’t be drawn into the guessing game, declining to specify a timeframe, but pointing out that rates will have to come down in the longer term.