CAIRO (Reuters) - Egypt’s central bank will likely leave its overnight interest rates unchanged at a meeting on Thursday, a Reuters poll showed, as inflation ticked upwards amid rebounding economic growth.
All 19 analysts polled believed the Central Bank of Egypt (CBE) would keep rates unchanged at its regular monetary policy committee meeting.
The lending rate has been at 9.25% and the deposit rate at 8.25% since November, their lowest since July 2014.
Urban consumer inflation climbed to 5.9% in August, its highest since November, although the figure remains well within the target range of 5%-9% set by the central bank.
Egypt’s gross domestic product grew 7.7% in the March to June quarter compared with a 1.7% contraction in the same quarter last year, the cabinet said in a statement on Sept 1.
“The major concern for the CBE will be how to keep inflation expectations well anchored around the CBE’s target and at the same time mitigate the effect of protracted uncertainties over the pandemic trajectory and the effect of the Fed’s tapering talks on financial markets sentiment and capital inflows,” said Mona Bedir of Prime Securities.
Several Federal Reserve officials said last week that an August slowdown in U.S. job growth would not throw it off tapering down on bond purchases this year.
Monette Doss of HC Securities said that foreign portfolio inflows had increased in August and the resumption of Russian flights to Egypt’s Red Sea would boost tourism receipts, helping to ease pressure on interest rates.
Egypt’s central bank cut its rates by 50 basis points each in September and November last year after having slashed them by 300 points in March 2020 to confront the fallout from the coronavirus pandemic.
“Eyes still remain on global inflationary risks and potential global monetary tightening, leaving CBE likely to keep its course of action thereby leaving rates on hold,” said Mohamed Abu Basha of EFG Hermes.
Reporting by Patrick Werr; Editing by Hugh Lawson
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