Egypt Due to Review Interest Rates Today – CBE

The Central Bank of Egypt (CBE) will be reviewing interest rates today amid expectations to keep them on hold.

The CBE’s first Monetary Policy Committee (MPC) in 2014 is expected to keep interest rates unchanged at today’s meeting to gauge effect of three cuts on CBE objectives and to leave room for further cuts toward end of fiscal year.

On December 5, 2013, the CBE decided to cut rates by 50 basis points. The overnight deposit rate currently stands at 8.25%, the overnight lending rate at 9.25%, the rate of the CBE’s main operation at 8.75%, and the discount rate at 8.75%. This is the third policy rate cut since August 2013, bringing the total cut to 150 basis points.

The CBE believes that pronounced downside risks to domestic GDP combined with a persistently negative output gap since 2011 will limit upside risks to the inflation outlook going forward, according to Beltone Financial said.

“Furthermore, we would have thought it more suitable to cut interest rates in two months’ time when at least the constitution would have been voted on and a clear political roadmap in terms of the sequence of parliamentary and presidential elections announced. Significant aid and investment inflows are expected toward the end of FY2013/14 and FY2014/15 and it would have been wise to wait and see how this rush in money supply would impact inflation.” Beltone further added in a recent study