The Central Bank of Egypt (CBE) will convene its monetary policy committee tomorrow to look into interest rates. This will be the last meeting for 2013.
In its ‘Weekly Call’ report issued on Sunday, the research team of Mubasher Trade ruled out any change in rates on the back of high inflation readings in October, which is expected to continue.
Pharos Research also said in a report issued on Tuesday it expects the MPC to keep policy rates unchanged for the second meeting in a row.
The slow pace of recovery in private credit/investments and EGP weakening in the black market do not justify further rate cuts. Also, short term claims on international reserves (US$ 1.0 billion to Qatar and cc US$ 6.4 billion dues to foreign oil companies) impose de-facto limits on how far EGP interest rates could fall, Pharos said.
“In line with the government’s stimulus plan, we expect further rate cut(s) in Q1-14 to cut interest expenses. Our view is supported by banks’ capacity to absorb further rate cuts without slashing deposit rates and triggering dollarization,” Pharos said.
In its meeting held on Thursday, October 31, 2013, CBE decided to keep the overnight deposit rate, overnight lending rate, and the rate of the CBE's main operation unchanged at 8.75%, 9.75%, and 9.25% respectively. The discount rate was also kept unchanged at 9.25%. This move came after the central bank cut interest rates twice. On September 19, the MPC made a second policy cut in row by 50bps. Overnight deposit rate reached 8.75% while overnight lending rate reached 9.75%. On August 1, the central bank unexpectedly lowered its main overnight interest rate by 50bps, saying it was more concerned about boosting growth than taming resurgent inflation. The discount rate was also cut by 50bps to 9.75%.
In its ‘Weekly Call’ report issued on Sunday, the research team of Mubasher Trade ruled out any change in rates on the back of high inflation readings in October, which is expected to continue.
Pharos Research also said in a report issued on Tuesday it expects the MPC to keep policy rates unchanged for the second meeting in a row.
The slow pace of recovery in private credit/investments and EGP weakening in the black market do not justify further rate cuts. Also, short term claims on international reserves (US$ 1.0 billion to Qatar and cc US$ 6.4 billion dues to foreign oil companies) impose de-facto limits on how far EGP interest rates could fall, Pharos said.
“In line with the government’s stimulus plan, we expect further rate cut(s) in Q1-14 to cut interest expenses. Our view is supported by banks’ capacity to absorb further rate cuts without slashing deposit rates and triggering dollarization,” Pharos said.
In its meeting held on Thursday, October 31, 2013, CBE decided to keep the overnight deposit rate, overnight lending rate, and the rate of the CBE's main operation unchanged at 8.75%, 9.75%, and 9.25% respectively. The discount rate was also kept unchanged at 9.25%. This move came after the central bank cut interest rates twice. On September 19, the MPC made a second policy cut in row by 50bps. Overnight deposit rate reached 8.75% while overnight lending rate reached 9.75%. On August 1, the central bank unexpectedly lowered its main overnight interest rate by 50bps, saying it was more concerned about boosting growth than taming resurgent inflation. The discount rate was also cut by 50bps to 9.75%.
Source:
Mubasher
