Egypt Central Bank Makes 2nd Consecutive Cut to Key Rates

Central Bank of Egypt's headquarter is seen in downtown Cairo, Egypt September 18, 2018. REUTERS/Mohamed Abd El Ghany
Central Bank of Egypt's headquarter is seen in downtown Cairo, Egypt September 18, 2018. REUTERS/Mohamed Abd El Ghany
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Egypt Central Bank Makes 2nd Consecutive Cut to Key Rates

Central Bank of Egypt's headquarter is seen in downtown Cairo, Egypt September 18, 2018. REUTERS/Mohamed Abd El Ghany
Central Bank of Egypt's headquarter is seen in downtown Cairo, Egypt September 18, 2018. REUTERS/Mohamed Abd El Ghany

Egypt’s central bank on Thursday cut its key interest rates for the second month in a row, after inflation fell further and as central banks globally ease monetary policy.

The overnight deposit and lending rates were cut by 100 basis points to 13.25 percent and 14.25 percent respectively.

All 11 economists surveyed by Reuters had said the Central Bank of Egypt’s (CBE) monetary policy committee would cut rates. Five said the bank would cut by 100 bps, three predicted a 150 bps cut and three 50 bps.

“It’s good for the economy, but broadly in line with expectations,” said Allen Sandeep, head of research at Egypt-based Naeem Brokerage, which predicted a 150 bps cut.

“We expect the monetary easing cycle to continue as inflation is likely to drop further before the MPC meets again in November,” Sandeep said.

The central bank cut rates after inflation figures fell to their lowest in more than six years, it said in a statement.

“Globally, the expansion of economic activity continued to weaken, financial conditions eased, and trade tensions continued to weigh on the outlook,” the bank said. “International oil prices remain subject to volatility due to potential supply-side factors that include geopolitical risks.”

July inflation came in significantly below expectations, and the headline figure fell further in August to a six-year low of 7.5 percent. Headline inflation reached a 2019 high of 14.4 percent in February.

At its last policy meeting in August, the central bank slashed its overnight deposit and lending rates by 150 basis points to 14.25 percent and 15.25 percent respectively.



Iraq, BP Agree to Develop Four Kirkuk Fields

The logo of British multinational oil and gas company BP is displayed at their booth during the LNG 2023 energy trade show in Vancouver, British Columbia, Canada, July 12, 2023. (Reuters)
The logo of British multinational oil and gas company BP is displayed at their booth during the LNG 2023 energy trade show in Vancouver, British Columbia, Canada, July 12, 2023. (Reuters)
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Iraq, BP Agree to Develop Four Kirkuk Fields

The logo of British multinational oil and gas company BP is displayed at their booth during the LNG 2023 energy trade show in Vancouver, British Columbia, Canada, July 12, 2023. (Reuters)
The logo of British multinational oil and gas company BP is displayed at their booth during the LNG 2023 energy trade show in Vancouver, British Columbia, Canada, July 12, 2023. (Reuters)

Iraq and oil major BP have signed a deal to redevelop four Kirkuk oil and gas fields, BP said on Tuesday, a breakthrough for Iraq, where output has been constrained by years of war, corruption and sectarian tensions.

The signing comes a day before BP plans to update investors on its strategy and is widely expected to reduce investments in renewable energy and shift back to invest more in oil and gas.

BP is expected to spend up to $25 billion over the lifetime of the project, a senior Iraqi oil official told Reuters in early February.

Under the terms of the agreement, which is subject to final ratification by Iraq's government, BP will work with North Oil Co.(NOC), North Gas Co. (NGC) and the new operator to stabilize and grow production, BP said.

Work will include a drilling program, the rehabilitation of existing wells and facilities, and the construction of new infrastructure, including gas expansion projects, it added.

BP said its remuneration will be linked to incremental production volumes, price and costs and will be able to book a share of production and reserves proportionate to the fees it earns for helping to increase production.

BP would boost crude production capacity from the four oilfields in Kirkuk by 150,000 barrels per day (bpd) to raise total capacity to at least 450,000 bpd in 2-3 years, according to a senior Iraqi oil official.

Tuesday's signing came after the two parties agreed on "technical issues and contractual terms, including the economic model of the project," according to a statement from the Iraqi prime minister office.

The BP deal is focused on rehabilitating facilities in four oilfields and developing natural gas to support Iraq's domestic energy needs.

BP was a member of the consortium of oil companies that discovered oil in Kirkuk in the 1920s. BP has estimated that the Kirkuk field holds about 9 billion barrels of recoverable oil.

The company holds a 50% stake in a joint venture operating the giant Rumaila oilfield in the south of the country, where it has been operating for a century.