Egypt's central bank: key interest rates steady at November rate

The Monetary Policy Committee (MPC) of Egypt's central bank will meet later Thursday to decide on its key policy rates but is not likely to make any radical changes. Central Bank of Egypt aims at maintaining a fragile balance between boosting growth and curbing inflationary pressures. Cairo based investment house Beltone Financial said in a note issued Thursday morning that the MPC is expected to keep the overnight deposit rate and overnight lending rate unchanged at 9.25 per cent and 10.25 per cent, respectively, and the 7-day repo at 9.75 per cent. The discount rate is also seen to remain unchanged at 9.5 per cent. The slowdown of headline and core inflation rates in May 2012, Beltone explains, warrants no need to raise policy rates. Also, Egypt should keep interest low in order to boost economy growth. Lowering interest rates, albeit its benefits in boosting economic activity, could add pressures on the domestic currency. The Egyptian pound is already suffering from weak foreign proceeds from tourism and investments as well as the depletion of foreign reserves used to keep it in balance. "We believe that at this juncture, the CBE will likely keep its policy rates unchanged." Beltone indicated. Last November, the CBE raised the overnight deposit to 9.25 per cent to protect local currency deposits. It also hiked the overnight lending rate and the 7-day repo rates to 10.25 per cent and 9.75 per cent respectively. It has been steady ever since. From Ahram