Central bank of Egypt seen keeping key rates on hold- poll

Egypt’s central bank is expected to hold interest rates Thursday as it balances the need to control inflation with its efforts to stimulate the economy, according to economists surveyed by Reuters.

The decision is due to come one week after the announcement that Central Bank governor Hesham Ramez will be replaced by senior banker Tareq Amer next month.

Inflation in Egypt slowed for three consecutive months from June but accelerated again in September to 9.2 percent from 7.9 percent in August. Core inflation eased to 5.55 percent in September from 5.61 percent in August.

Five economists surveyed by Reuters all said they expect the central bank’s monetary policy committee (MPC) to keep rates on hold during their meeting on Oct. 29.

“Inflationary pressures gained pace in September due to rising prices of vegetables, probably leaving the central bank less inclined to increase interest rates, although overall inflation remains largely tame as reflected in the low level of core inflation,” said Mohamed Abu Basha, economist at EFG Hermes.

“We also believe the recent announcement of the change in governor of the central bank is likely to warrant a stable policy rate before the new governor assumes office later in November,” he added.

At its last meeting on September 17, the central bank kept its key rates on hold, with its overnight deposit rate at 8.75 percent and its lending rate at 9.75 percent.

It was the fifth consecutive meting in which rates were kept on hold following a surprise 50-basis point cut in January.

Economic and political instability in Egypt since a popular uprising in 2011 toppled autocrat Hosni Mubarak from power has contributed to the country’s slow growth.

Growth was around 4.2 percent last year and the government expects growth of about 5 percent in this fiscal year.

Source: Reuters