Is Egypt Ready to Apply Inflation Targeting Regime?

The purpose of this study is to answer the question ‘Is Egypt ready to apply IT regime? The researcher presumed that; a country is ready to apply IT regime once the prerequisites for IT regime are available. Comparing the current position of Egypt with some emerging market economies, the conclusions point to the following: (i) the CBE is not factually independent. Although the CBE has been granted legal independent instrument, the existence of the government representatives as voting members in the MPC and the coercion of the CBE to extend finance to the government are two elements sufficient to underpin the de facto independence of the CBE; (ii) inflation targets are expected to be missed under the possibility that the behavior of the CBE will be similar to the behavior of the majority of emerging market economies, i.e. adopting IT regime whereas implicitly targeting FX rate; and (iii) the current level of knowledge about some central issues of designing IT regime and the quality of the available data are not satisfactory to support the adoption of IT regime. The study concluded that Egypt is still not ready to apply IT regime.