Egypt’s central bank seen making fourth straight interest rate cut: HC

Egypt’s central bank is likely to cut its key interest rates by 50 basis points on Thursday, Dec. 26 monetary policy meeting, an HC Securities and Investment report showed.

Inflation continued to retreat in December as monthly food and beverages dropped by 1.75 percent, 1.81 percent, 1.51 percent, for three consecutive months between September and November, respectively, said HC senior economist Monett Doss.

This is partially emerging from Egyptian government’s efforts to lower prices of subsidised food staples, Doss explained.

Prices of subsidised food staples are likely to stablise in the coming few months, she added.

Annual inflation is likely to rise to 7.3 percent in December, far less than estimated by the central bank at 9 percent for the fourth quarter of 2020. This will allow the central bank to continue its monetary easing policy to boost economic growth and capital market activity, Doss said.

The central bank cut its key interest rates on Nov. 14 at its third consecutive policy meeting since August. The overnight deposit and lending rates were cut by 100 basis (bps) points to 12.25 percent and 13.25 percent respectively.