Saturday , March 6 2021

The Egyptian Central Bank will probably not change interest rates

The Reuters poll on Tuesday showed that the central bank is likely to keep its key interest rates on a permanent meeting on Thursday, although in October it was higher than expected inflation. Eight of the 13 economists surveyed by Reuters said that the Bank's Monetary Policy Committee is likely to keep deposit and loan rates at 16.75 and 17.75 percent, respectively. Two experts hoped that the bank would raise interest rates by 100 basis points.

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"While core inflation suggests that in the medium term, Egypt will be able to reduce its inflation below the two-digit average, a strong acceleration will require a response from the committee to raise its interest rates by at least 100 basis points per quarter from its point of view," said Jaap Meeger, Head of Capital Research, Arqaam Capital We looked at it. "

Consumer prices in the Egyptian city rose to 17.7 percent in October, up 2.6 percent from the previous month, up from 2.5 percent in September, mainly due to fruit prices for fruits and vegetables.

Quarterly inflation, which excludes goods like food because of price fluctuations, rose to 8.86 percent in October from 8.55 percent a month earlier.

"We are not seeing an annual increase in consumer price inflation in cities that is causing concern as seasonal factors have changed," said Beltone Financial, Major Economist Alia Mamdouh.

In addition to rising inflation, Egypt is forced to sell new markets caused by the Currency Crisis in Argentina and Turkey.

"A weak investment is a strong reason for lowering interest rates," said HSBC Middle East economist Simon Williams. "However, inflation continues to rise, capital flows are rising, and global appetite is fraught with risk." The maneuvering area of ​​the Egyptian Central Bank is limited, and we expect interest rates to remain unchanged. "

In the summer, Egypt increased fuel, electricity and transport prices in the latest reforms under the International Monetary Fund (IMF) loan program signed at the end of 2016, with $ 12 billion, which included currency liberalization, a significant reduction in energy subsidies and a tax increase.

The Central Bank's monetary policy committee raised its interest rates by 700 points in eight months, in agreement with the IMF in November 2016, to reduce inflation. Subsequently, interest rates were reduced in February and again in March this year by 200 basis points in total.

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