14 experts announce their expectations for interest rates in Egypt

A Reuters poll showed that the Central Bank of Egypt is expected to keep overnight interest rates unchanged on Thursday, but some analysts have speculated that a recent cut in interest rates at a state bank may indicate a cut.

Ten of the 14 analysts who participated in the survey expected the central bank to keep interest rates unchanged at the MPC meeting. Four analysts expected a cut of 50 basis points.

The central bank cut its benchmark interest rate by 300 basis points in March and then another 50 points in both September and November. The overnight lending rate is currently 9.25% and the deposit rate 8.25%, the lowest levels since July 2014.

“We do not believe that the central bank is in a hurry to cut interest rates,” said Mohamed Abu Basha of EFG Hermes. “In light of the second wave of the pandemic, uncertainty surrounds global expectations.”

He continued, “Real interest rates are already at the target range between two and three percentage points, and the central bank made a massive cut of 400 basis points last year.”

But some analysts expect a cut of 50 basis points, especially after the National Investment Bank, a major buyer of treasury instruments, on Sunday cut the return on investment certificates it offers to the public by 3.75 basis points.

“It is a clear indication that the liquidity priority is increasing now,” said Alan Sandeep of Al-Naeem Brokerage.

The Central Agency for Public Mobilization and Statistics said that consumer price inflation in Egyptian cities slowed to 5.4% in December from 5.7% in November, to remain below the central bank’s target range of 6 to 12%.