Egypt’s central bank is likely to leave its overnight interest rates on hold on Thursday, a Reuters poll showed, as inflation remained below target and growth appeared to be picking up.
Of 16 analysts polled, 15 believed the Central Bank of Egypt (CBE) would leave rates unchanged at its regular monetary policy committee meeting. One predicted a cut of 50 basis points (bps).
The central bank slashed its benchmark rate by 300 bps last March and another 50 bps each in September and November.
The overnight lending rate is now 9.25 percent and the overnight deposit rate 8.25 percent, their lowest since July 2014.
“February’s low inflation outturn supports a rate cut, but recent global market jitters between rising commodity prices and higher global interest rates are likely to push the CBE to maintain rates on hold,” said Mohamed Abu Basha of EFG Hermes.
Urban consumer price inflation accelerated to 4.5 percent in February from 4.3 percent in January, still below the five percent to nine percent target range set by the central bank in December.
“Despite inflation remaining weak at the start of the year, we expect the headline inflation rate to increase in the coming months,” said James Swanston of Capital Economics.
The economy grew by an annualized 1.35 percent in the last half of 2020 and by two percent in the final quarter, Planning Minister Hala al-Saeed said on Wednesday.
She expected it to grow by 2.8 percent in the first quarter of 2021 and 5.3 percent in the second quarter.
On Monday, the CBE said remittances from Egyptians working abroad rose 10.5 percent year-on-year to $29.6 billion in 2020.
Remittances during the final quarter of the year stood at about $7.5 billion, up from about $7 billion the previous year, it added.
