Cairo (Reuters) – The Central Bank of Egypt (CBE) is expected to leave its overnight interest rates unchanged on Thursday after President Abdel-Fattah al-Sisi appeared to rule out any devaluation of the currency in coming months, a Reuters poll showed on Monday.
The median forecast in a poll of 17 analysts is for the bank to maintain its deposit rate at 18.25% and its lending rate at 19.25% when its regular monetary policy committee (MPC) meets. None of the analysts expected rates to change.
The MPC also left rates steady at its last meeting on May 18 despite surging inflation.
Annual urban inflation accelerated to 32.7% in May, just short of an all-time high, from 30.6% in April. Month-on-month, inflation jumped to 2.7% from 1.7% in April.
The president seemed to rule out a further currency devaluation anytime soon in remarks made to a youth conference last week, saying such a move could harm national security and hurt Egyptian citizens.
“The authorities seem keen to keep the currency steady for now, which removes a possible trigger for higher rates,” Noaman Khalid of NBK said.
The apparent shift away from policies agreed with the International Monetary Fund in December suggested Egypt would at least temporarily abandon other painful IMF prescriptions such as tightening interest rates, analysts have said.
(We) “expect the CBE to keep rates on hold given expected better FX liquidity in the short term and lower probability of another EGP devaluation,” Pascal Devaux of BNP Paribas said.
Since Russia invaded Ukraine in February 2022, the central bank has allowed the Egyptian pound to lose half of its value against the dollar.
