Interest rates to remain stable: Reuters poll

CAIRO - 4 July 2017: The Central Bank of Egypt (CBE) is expected to keep basic interest rate without change in July, after raising its key interest rates by 200 basis points in May, a Reuters poll said Monday.

Economists surveyed by Reuters said the interest rates will be maintained to curb inflation that boosted since currency flotation in November 2016.

Nine out of 10 surveyed economists said the Monetary Policy meeting due next Thursday is unlikely to raise interest rates.

They, however, expected an increase in inflation due to rising fuel prices.

Egypt’s raised fuel prices as well up to 100 percent, it was the second raise since November 2016, and a further step to cut down budget deficit.

The inflation rates slightly deteriorated but still at 30 percent, according to May figures when the Central Bank raised its overnight deposits to 16.75 from 14.75 percent and lending rate to 17.75 from 15.75 percent in its previous meeting on the May 21.

This unprecedented interest rate bounce is considered the first since the Central Bank raised its interest rates to 300 basis points in November, in the context of the lending program worth of LE 12 billion from the International Monetary Fund (IMF) to reform Egypt’s economy.

Since 2011 revolution, Egypt has suffered from economic regression followed by declining tourism, foreign investment and depletion of foreign reserves, which in turn burdened President Abdel Fatah al-Sisi in the middle of comprehensive economic reforms tied to boosting inflation.