Central Bank of Egypt leaves interest rates unchanged

The Central Bank of Egypt kept its interest rates unchanged in its Monetary Policy Committee (MPC) on Thursday, setting the overnight deposit rate and the overnight lending rate at 18.75 percent and19.75 percent, respectively.

In its previous meeting on November 16, the MPC also kept its interest rates unchanged.

Economists and investment banks have expected the CBE to keep rates unchanged. They said that since the CBE did not cut interest rates in its last November meeting despite cooling inflation, it was likely to follow a similar conservative approach in its meeting today.

Egypt’s annual urban consumer price inflation fell to 26.7 percent in November, from 30.8 percent in October, according to the official statistics agency CAPMAS. Finance Minister Amr el-Garhy said that inflation is expected to drop down to 20 percent in January and to 13-14 percent by August 2018.

Inflation has soared since the flotation of the Egyptian pound in late 2016 and it peaked in July reaching 30 percent. However, it started easing afterwards.

Meanwhile, other economists expected an easing CBE approach, driven by the lower inflation rates registered in November, which should have encouraged the CBE to cut interest rates.

They expected the first cut to take place this month at 100 basis points to hit 17.75 percent.

The CBE had increased interest rates by a total of seven percent since the flotation of the Egyptian pound in November 2016 in a bid to curb inflation. Source: Egypt today