CBE May Leave Interest Rates Unchanged

Central Bank of Egypt (CBE) will probably keep its benchmark interest rate unchanged as pressure on the currency offsets concerns about the economy’s slow growth.

The Monetary Policy Committee, led by Governor Farouq El- Okdah, will keep the overnight deposit rate at 9.25 percent when it meets today, according Bloomberg News. CBE usually meets at 3 p.m. and announces the decision two hours later.

The inflation rate is low and the economy is weak, yet “the risk of a currency crisis is still high,” said Said Hirsh, an economist at Capital Economics in London. “We don’t think that the central bank will cut rates yet.”

Annual inflation in urban areas, the gauge CBE monitors, slowed to 8.3 percent in May from 8.8 percent in April. Economic growth has been the weakest in decades after the uprising against Hosni Mubarak last year deterred tourists and investors. The election of a successor is due to be completed in a two-day runoff vote on June 16 and 17.
The pound has only fallen about 4 percent against the dollar since the start of last year, less than most emerging- market currencies.
CBE raised the key interest rate by one percentage point in November, citing inflationary pressures, though some economists said it was intended to prevent a run on the pound, Bloomberg reported.