The Central Bank of Egypt is likely to leave interest rates on hold when its Monetary Policy Committee meets tomorrow, according to HC Securities & Investment.
The bank to leave interest rates unchanged after slashing rates 300 bps in an emergency cut barely two weeks ago. The bank said the move was “preemptive” to support the economy through the covid-19 pandemic.
Monette Doss, economist and banking analyst at HC Securities & Investment, said, “Despite the decline in the inflation figure in February, we believe that inflationary pressures could resume over the coming months due to stocking up of staple and pharmaceutical products following the announcement of the curfew in Egypt, relatively higher demand during the month of Ramadan, and possible supply shortages resulting from prolonged periods of lockdown. We believe monthly inflation could average c1% over the rest of 2020e to record an average of 6.4% over the first half (1H) of the year, backed by a favourable base effect, and to reach a peak of 11.45% year-over-year in December. We accordingly expect the Central Bank of Egypt (CBE) to maintain rates unchanged in its upcoming meeting.”
The CBE’s overnight deposit rate is at 9.25 percent and the lending rate is at 10.25 percent. The main operation and discount rates are both at 9.75 percent.
