Africa News Egypt's central bank seen holding key interest rates steady

Egypt's central bank seen holding key interest rates steady

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CAIRO – Egypt's central bank is likely to be left unchanged on its meeting on Thursday, Reuters poll showed on Tuesday, a decline in inflation in recent months.

Ten out of 14 economists polled by Reuters said the bank 's monetary policy committee was unlikely to change its overnight rates, with deposits at 16.75 percent and 17.75 percent lending.

Two analysts forecast that the Central Bank of Egypt (CBE) would cut rates by 50 basis points. Two others said it would be cut by 100 basis points.

"We anticipate that we will be unchanged in February," said Maya Senussi, senior economist for the Middle East at Oxford Economics.

"The retreat in inflation should not be changed, but it should be kept in mind, but the EPC will be cautious to change its stance.

Headline inflation rose in January to 12.7 percent from 12.0 percent in December, after falling from 15.7 percent in November. The bank's target range is 10 to 16 percent.

Core inflation, which strips out volatile items such as food, also rose in January, to 8.6 percent from 8.3 percent a month earlier.

"I believe in these factors," said Hany Farahat, CI Capital senior economist at investment bank. CBE targets "Notably, the drop in inflation to comfortable levels, especially core inflation, which is way below CBE targets."

He also said that it is important to support the Egyptian pound, "show the way to a lower premium on the EGP, as shown by the drop in treasury yields."

Some economists foresaw cuts by August, following an expected fuel subsidy cut in the summer to an agreement with the International Monetary Fund.

Last Updated: May 2010, March 12th, 2010, p.

To curtail inflation, the central bank is monetary policy committee. It last cut them in February and March last year by a combined 200 basis points.

(Reporting by Yousef Saba, editing by Larry King) ((Yousef.Saba@thomsonreuters.com; +201222184730))

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