CBE Expected To Keep Interest Rates Unchanged On Thursday

A number of banking experts expected the Monetary Policy Committee to leave overnight deposit and lending rates unchanged at 9.25% and 10.25% respectively, as well as repo rates at 9.75% and credit and discount rates at 9.5%, in its meeting next Thursday. Bankers attributed this decision to the market recession due to the current political turmoil.

Haitham Abdel Fattah, head of treasury department at the Industrial Development and Workers Bank of Egypt, said the monetary policy adopted by the Central Bank of Egypt (CBE) is to leave interest rates unchanged because the economic conditions have not changed and there is no need for raising or lowering interest rates.

CBE have succeeded in managing the monetary policy in the country and passed the local and global financial crises relatively unscathed, he noted.

Osama El Manialawy, assistant general manager of the treasury department at Société Arabe Internationale de Banque (SAIB), expected the Monetary Policy Committee to leave interest rates unchanged because there are no changes and the economic and political views are not clear.

Asked about the impact of the inflation rate which reached 6.70% last October, compared to 6.22% in September, El Manialawy noted that the inflation level is not the main factor affecting interest rates. Inflation rates sometimes change without affecting interest rates, he affirmed.

Mahmoud Negm, deputy manager of investment department at Export Development Bank of Egypt, said the Monetary Policy Committee is likely to leave interest rates unchanged, adding that the inflation rate will not affect their decision. Interest rates are determined according to the future expectations, he noted.

The low foreign investment rate in Egypt is from the most important factors affecting the interest rates.  The Monetary Policy Committee will not raise interest rates with the aim of providing more cash liquidity at banks.