Pharos Research said in a report it expects the Monetary Policy Committee (MPC) of the Central Bank of Egypt (CBE) to keep policy rates unchanged in its upcoming meeting next Thursday as the plunge in international commodity prices caps inflationary pressures and expectations.
“In our view, the only constraint against a full-fledged shift to monetary easing is the steep depreciation of the EGP versus the US$ in the black market over the past few days, from an average of 7.4 in Q3-14 to cc 7.7 at present,” said Pharos.
In its meeting held on October 16, 2014, MPC decided to keep the overnight deposit rate, overnight lending rate, and the rate of the CBE’s main operation unchanged at 9.25 percent, 10.25 percent, and 9.75% percent respectively. The discount rate was also kept unchanged at 9.75 percent.
Interest rates were also kept unchanged in a meeting held September 1.
In a meeting held Thursday, July 17, 2014, the central bank had decided to raise the overnight deposit rate, overnight lending rate and the rate of the CBE’s main operation by 100 bps each to 9.25%, 10.25% and 9.75% respectively. The discount rate was also raised by 100 bps to 9.75%.