“Egypt’s central bank is expected to leave interest rates unchanged at a monetary policy meeting on Thursday in order to focus on taming inflation, four out of six economists surveyed by Reuters said,” Egypt Independent reported today.
“We think the central bank will hold off on cuts until the third quarter, when the effect of last year’s energy price hikes fall out of the inflation data,” said Jason Tuvey at Capital Economics.
“The four forecast the central bank would keep overnight rates at 9.75 percent for lending and 8.75 percent for deposits. Two others expected a 50-basis point cut,” Reuters reported.
Most analysts agree that tackling inflation remains the bank’s main priority. However, one more rate cut would boost investors’ confidence ahead of a key economic summit next month. [Sisi Promises Investment Opportunities For Economic Summit Guests]
Inflation in Egypt slowed last month but still remains high.
- Urban consumer inflation fell to 9.7 percent in January from 10.1 percent in December 2014.
- Core* inflation, declined to 7.06 percent in January from 7.69 percent in December 2014.
Many central banks have already eased monetary policy this year, Reuters noted. According to Ian Bremmer, last month he reported that only in 2015, four emerging market central banks had already cut benchmark interest rates against expectations. One of the banks was the Central Bank of Egypt.
Earlier this month, on February 5th, ZAWYA reported that the Central Bank of Egypt had struck another blow against the country’s unofficial currency market, with a cap on the amount of dollars that could be deposited in banks, private bankers and a central bank. Since the date, the cap has been limiting dollar deposits in banks to $10,000 a day or a total of $50,000 a month.
*) Excludes volatile items like fruit and vegetables.
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