Egypt’s central bank seen keeping interest rates unchanged: poll

Egypt’s central bank seen keeping interest rates unchanged: poll

CAIRO- The Central Bank of Egypt (CBE) is expected to leave its overnight interest rates on hold at a meeting on Thursday, a Reuters poll showed, as it strives to attract portfolio investment while tamping down inflation. All but one of 18 analysts polled believed the central bank would keep rates unchanged at its regular monetary policy committee meeting. The lending rate has been at 9.25% and the deposit rate at 8.25% since November, their lowest since July 2014. Real interest rates nonetheless remain among the highest in the world. "Given ongoing underlying fragility in the external accounts, particularly the country's dependence on debt-creating inflows to fund its trade deficit, we believe that maintaining high real rates is likely to remain the preferred strategy," Goldman Sachs said in a note. This was "to safeguard against an outflow of foreign (mainly short-term) portfolio investment," the note said. Egypt's current account deficit widened to $18.4 billion in the financial year to June 2021 from $11.2 billion a year earlier after tourism revenue plunged, while the trade deficit increased to $42.06 billion from $36.47 billion. Annual urban consumer inflation climbed to 6.6% in September, its highest since January 2020, from 5.7% in August.