Egypt's central bank to hold interest ratesSource: www.export-egypt.com 12/27/2016, Location: Africa |
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 Egypt's central bank is expected to keep interest rates unchanged, holding fire on further action until the impact on inflation of last month's steep hike in borrowing costs becomes clearer, a Reuters poll showed.
In early November the central bank ditched its foreign exchange peg of 8.8 pounds per dollar and, to help stabilise the newly floated currency, hiked interest rates by 300 basis points. The pound has since weakened to around 19 per dollar.. Annual headline inflation surged to an eight-year high of 19.4 percent in November and many economists expect prices to keep rising next year, driven by economic reforms including subsidy cuts and tax increases.. But seven of 11 economists polled by Reuters said they expected the central bank's monetary policy committee (MPC) to hold overnight deposit rates at 14.75 percent and overnight lending rates at 15.75 percent at its meeting . "The inflation outturn for November saw a big jump, but we think this is largely expected given the float of the currency and hike in fuel prices," said Mohamed Abu Basha, economist at EFG Hermes.. "We don't see (the central bank) moving on interest rates before a few more inflation readings to have a clearer view on inflation trends." Four respondents forecast a hike - two of 50 basis points, one of 150 points and one of 200 points.. Hany Genena, head of research at Beltone Financial, who forecast the 200-point hike, cited inflationary pressures as the key factor. |
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