Central Bank of Egypt Expected to Keep Interest Rates Unchanged in Next Meeting

Business

December 21st, 7:08am

Asharq Al-Awsat

FILE PHOTO: Central Bank of Egypt's headquarters seen in downtown Cairo, Egypt, September 7, 2017. REUTERS/Mohamed Abd El Ghany/File Photo

The Central Bank of Egypt’s (CBE) Monetary Policy Committee (MPC) is expected to keep interest rates unchanged in its next meeting, HC Securities & Investment said in a statement on Sunday. Asharq Al-Awsat obtained a copy of the report which expected the CBE to reduce interest rates by 100 basis points (bps) in Q1-21 and hold rates unchanged in its next December meeting. Inflation is also forecast to accelerate to 6.1 percent year-on-year (YoY) and 0.2 percent month-on-month (MoM) in December due to the price hikes resulted from supply shocks of some vegetables, said Head of Macro and Financials at HC, Monette Doss. It would still remain within the CBE’s target of 9% plus or minus three percentage points for the fourth quarter (Q4) of 2020. In addition, unemployment rate declined to 7.3% in Q3-20 from 9.6% in the prior quarter, reflecting positively on consumer spending. “We also believe that the relative improvement in investor confidence together with monetary easing started to bear fruit as indicated by Egypt’s Purchasing Manager Index (PMI) exceeding the 50 benchmark in September, October and November, coming in at 50.4, 51.4 and 50.9, respectively.” Real interest rate on short-term deposits and loans is seen at about 2 percent and 4 percent, respectively, higher than their 12-year average of about -3 percent and 1 percent. Doss also expected foreign inflows into Egyptian debt instruments to retreat over the next months, citing "possible diversion of funds towards recovering emerging markets’ stocks this is beside possible outflows due to profit taking in December.”

from Asharq AL-awsat https://english.aawsat.com/home/article/2694976/central-bank-egypt-expected-keep-interest-rates-unchanged-next-meeting