Egypt's central bank on Thursday has held interest rates, putting monetary easing on pause for another month as the coronavirus keeps global markets on edge. The deposit rate will be still at 8.25 percent and the lending rate at 9.25 percent, the central bank's Monetary Policy Committee said in a statement. After cutting a combined 850 basis points throughout 2019 and 2020, authorities in Egypt are treading a cautious path amid mixed signs of when the pandemic will ease. Adjusted for prices, Egypt's policy rate is seen the highest after Vietnam and Malaysia among more than 50 major economies tracked by Bloomberg, an important factor in alluring foreign investment in the North African country's debt. While some of Egypt's main sources of foreign currency such as tourism and Suez Canal receipts have taken a hit from the pandemic, overseas holdings in local Treasury bills and bonds soared to an 11-month high of $26.9 billion in January. Slowing inflation, which came in below the central bank's target range during the last three months of 2020, could allow cuts in the months ahead. Sluggish domestic demand, a strengthening currency and a fuel-pricing mechanism that lowers the impact of volatility in global energy prices, could allow a reduction of 50 basis points later in the first quarter of the year, Farouk Soussa, an economist at Goldman Sachs Group Inc., told Bloomberg. Meanwhile, Carla Slim, an economist at Standard Chartered Plc., predicted to Bloomberg before Thursday's decision that "the easing cycle has ended" for the immediate future.
