Egypt’s central bank may maintain key rates ahead of expected fuel price hike
Egypt’s central bank is likely to maintain interest rates at its meeting on Thursday, a Reuters poll showed on Monday, although some analysts predicted a cut ahead of expected fuel price increases this summer, Trend reports citing Al Arabiya.
Eight out of 12 economists polled by Reuters said the bank’s monetary policy committee was unlikely to change its overnight rates, with deposits at 15.75 percent and lending at 16.75 percent.
Four analysts predicted that the Central Bank of Egypt (CBE) would cut rates by 100 basis points (bps), following a cut of the same size last month, which was the first since March 2017.
“We anticipate that the CBE will keep interest rates on hold this month due to the recent uptick in price inflation,” said Nadene Johnson, an economist at NKC African Economics. “But considering the need for private sector stimulus, the CBE is expected to reduce rates by 100 bps before year end.”
Headline inflation quickened in February to 14.4 percent from 12.7 percent in January. It had cooled to 12.0 in December from 15.7 percent the month prior. The bank’s target range is 10 to 16 percent. Core inflation, which strips out volatile items such as food, also rose in February to 9.2 percent from 8.6 percent the previous month.
“The CBE I believe would need to capitalize on the cut that took place last month with another 1 percent cut this month,” said Hany Farahat, senior economist at Egyptian investment bank CI Capital.