⁍ Headline inflation slackened to 3.4% in August from 4.2% in July.

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⁍ Some economists expect the September figure, expected around Oct. 10, to be similar.

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⁍ If inflation falls too quickly, the IMF could argue that the central bank’s monetary committee should consider lowering interest rates.

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– Egypt’s inflation has fallen to some of its lowest levels in well over a decade, potentially triggering consultations with the International Monetary Fund under the conditions of a new $5.2 billion loan. The trend also sharpens a dilemma for the central bank: whether to keep interest rates high to sell treasury bills and protect the currency, or lower them to encourage growth in an economy battered by the coronavirus pandemic. Under a one-year, $5.2 billion Stand-By Arrangement signed with the IMF in June, Egypt committed to consult a technical team if inflation were to fall below 6% by end-September and the IMF board itself if year-on-year inflation falls below 4%. Headline inflation slackened to 3.4% in August from 4.2% in July, near its slowest since 2005. Some economists expect the September figure, expected around Oct. 10, to be similar. If inflation falls too quickly, the IMF could argue that the central bank’s monetary committee should consider lowering interest rates when it next meets on Nov. 12, some economists said. The central bank has been reluctant to reduce rates until it is sure dollar flows such as tourism, worker remittances, and foreign purchases of Egyptian treasuries are once again stable, they added. “I don’t think they’re comfortable cutting rates when the external balances are still under pressure,” said Mohamed Abu Basha of EFG Hermes. “High real rates also keep the carry trade going.”