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Egypt's Central Bank expected to leave interest rates unchanged Financial experts predict the bank's monetary policy team will keep overnight deposit and lending rates steady in a bid to stave off inflation
The Monetary Policy Committee (MPC) of Egypt's central bank will meet later today to decide on its key policy rates but is not thought likely to make any radical changes. Beltone Financial, a leading Cairo based investment bank, expects the MPC to keep the overnight deposit rate and overnight lending rate unchanged at 8.25 and 9.75 per cent, respectively. Key interest rates have not been altered since September 2009. Policy rates are also expected to remain unchanged in the upcoming meeting in December 2011. Beltone indicates that growth of the Egyptian economy will continue to “falter amid the political uncertainty and tensions. while the domestic currency will continue to be pressured”. But the bank is not certain that inflation will take a downward trend as it is influenced by the drop in global and domestic growth. Egypt's annual inflation registered 8.5 per cent in September, a slight dip from August's figure of 8.8 per cent, according to the official Central Agency for Statistics and Mobilisation. It has been dropping over the course of the last 2 months. “We believe that maintaining policy rates unchanged is the most appropriate decision to address slowing growth and increasing pressures on the currency,” Beltone said in a note issued today, adding that an interest rate cut is unlikely to boost credit at the moment. The bank attributes the contracting of credit and lack of investments to political instability, which is not connected to monetary policy.
