Egypt’s central bank is likely to leave its overnight interest rates on hold tomorrow, a Reuters poll showed, as inflation remained below target and growth appeared to be picking up.
Of 16 analysts polled, 15 believed the Central Bank of Egypt (CBE) would leave rates unchanged at its regular monetary policy committee meeting. One predicted a cut of 50 basis points (bps).
The central bank slashed its benchmark rate by 300 bps last March and another 50 bps each in September and November. The overnight lending rate is now 9.25 per cent and the overnight deposit rate 8.25 per cent, their lowest since July 2014.
“February’s low inflation outturn supports a rate cut, but recent global market jitters between rising commodity prices and higher global interest rates are likely to push the CBE to maintain rates on hold,” said Mohamed Abu Basha of EFG Hermes.
Urban consumer price inflation accelerated to 4.5 per cent in February from 4.3 per cent in January, still below the 5 per cent to 9 per cent target range set by the central bank in December.
“Despite inflation remaining weak at the start of the year, we expect the headline inflation rate to increase in the coming months,” said James Swanston of Capital Economics.
The economy grew by an annualised 1.35 per cent in the last half of 2020 and by 2 per cent in the final quarter, Planning Minister Hala al-Saeed said last Wednesday. She expected it to grow by 2.8 per cent in the first quarter of 2021 and 5.3 per cent in the second quarter.
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