Middle East

Egyptian central bank seen leaving interest rates steady

2 minute read

A customer exchanges U.S. dollars to Egyptian pounds in a foreign exchange office in central Cairo, Egypt December 27, 2016. REUTERS/Mohamed Abd El Ghany

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CAIRO, Dec 13 (Reuters) - The Central Bank of Egypt (CBE) will keep its overnight interest rates unchanged at a meeting on Thursday, a Reuters poll forecast, after inflation slowed in November and as the country seeks more foreign buyers for its treasuries.

All 15 analysts polled believed the central bank would keep rates unchanged at its regular monetary policy committee meeting.

The bank has kept its lending rate at 9.25% and its deposit rate at 8.25% since November 2020, when they fell to their lowest since July 2014. The bank's real interest rates are still among the highest in the world.

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"Inflation slowed down again in November," said Mohamed Abu Basha of EFG Hermes. "Moreover, the recent uncertainty on the COVID variant supports yet another meeting with rates left on hold."

The economy has roared back after sagging during the worst of the coronavirus pandemic. Gross domestic product shot up by 9.8% year on year in the July-September quarter, up from 0.7% a year earlier, planning ministry data showed.

Egypt may seek to keep its real interest rates appealing as other central banks around the globe tighten monetary policy, said Callee Davis of Oxford Economics Africa.

"With Egypt also becoming increasingly reliant on capital inflows to fund its external position, the CBE may opt to hike rates towards the end of 2022," she said.

The current account deficit widened to $18.4 billion in the financial year to June 2021 from $11.2 billion in 2019/20 after tourism revenue plummeted. The trade deficit increased to $42.06 billion from $36.47 billion.

Egypt's annual urban consumer price inflation slowed to 5.6% year on year in November from 6.3% in October, data from the state statistics agency CAPMAS showed last week, within the central bank's target range of 5%-9%.

Core inflation rose to 5.8% year on year in November from 5.2%.

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Reporting by Patrick Werr, editing by Ed Osmond

Our Standards: The Thomson Reuters Trust Principles.

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