Inflation targeting (IT), in simplistic terms, is a monetary policy regime that is based upon the commitment of a country’s monetary authority to meeting predetermined, quantitative targets for the annual rate of inflation. IT has attained popularity and widespread acclamation amongst policymakers in the international context over the past three decades. Since Egypt initiated a new economic and structural reform program supported by the Extended Fund Facility from the IMF in November 2016, the search for a new nominal anchor for the Egyptian economy has been underway. In this regard, the new objective seems to be a temporary switch to a monetary targeting regime in the short run, while moving towards the implementation of a full-fledged IT regime in the medium term. Against this background, the Central Bank of Egypt (CBE) recently released a draft law indicating its desire to transition towards IT. This paper aims to answer the question of whether or not Egypt is ready for the implementation of IT. I propose a twofold methodology based on an assessment of the institutional and technical framework currently in place in Egypt, combined with a comprehensive survey of the current international practices of 28 inflation-targeting countries to determine whether or not the Egyptian framework is adequate in meeting the basic preconditions for IT, and to identify the practical considerations that need to be taken into account if the CBE indeed decides to adopt an inflation targeting regime in the near future.


Economics Department

Degree Name

MA in Economics

Graduation Date


Submission Date

May 2018

First Advisor

El Safty, Ahmed

Committee Member 1

El Syed, Ali Shah


125 p.

Document Type

Master's Thesis


The author retains all rights with regard to copyright. The author certifies that written permission from the owner(s) of third-party copyrighted matter included in the thesis, dissertation, paper, or record of study has been obtained. The author further certifies that IRB approval has been obtained for this thesis, or that IRB approval is not necessary for this thesis. Insofar as this thesis, dissertation, paper, or record of study is an educational record as defined in the Family Educational Rights and Privacy Act (FERPA) (20 USC 1232g), the author has granted consent to disclosure of it to anyone who requests a copy.

Institutional Review Board (IRB) Approval

Approval has been obtained for this item


I would first like to thank my thesis advisor Dr. Ahmed El Safty, whose door was always open whenever I ran into a trouble spot or had a question about my research or writing. He consistently allowed this paper to be my own work, but steered me in the right the direction whenever he thought I needed it. I would also like to thank the experts who were involved in the validation survey for this research project: Dr. Mina Samy Ayad and Dr. Ali Shah El Sayed. Without their passionate participation and input, this research could not have been successfully conducted. Finally, but most importantly, I must express my very profound gratitude to my beloved mother, father and siblings for providing me with unfailing support and continuous encouragement throughout my years of study and through the process of researching and writing this thesis. This accomplishment would not have been possible without them. All of my success I owe to you. Thank you.