February 18, 2020 / 7:48 AM / 3 months ago

Egypt central bank seen keeping key interest rates steady

A man counts U.S dollar bills at a money exchange office in central Cairo, Egypt, March 7, 2017. REUTERS/Mohamed Abd El Ghany

CAIRO (Reuters) - Egypt’s central bank is likely to keep interest rates on hold for a second straight time on Thursday, a Reuters poll suggested, though some analysts expected another cut after inflation ticking up in January.

Six out of 11 economists surveyed by Reuters expected the Central Bank of Egypt to keep rates steady when its monetary policy committee meets, while five forecast a cut of between 50 and 100 basis points.

At the last meeting on Jan. 16, the CBE left its overnight rate at 13.25% for lending and 12.25% for deposits, unexpectedly halting an easing cycle that had shaved off 350 basis points since August.

The most populous Arab country is emerging from a three-year IMF-backed economic reform programme that saw inflation soar as high as 33% during 2017.

Egypt’s annual urban consumer inflation rose to 7.2% in January from 7.1% in December after falling to as low as 3.1% in October, its slowest since December 2005.

“We project another rate cut of 50 - 100 bps as inflationary pressures are expected to ease amidst weak domestic demand conditions,” said Callee Davis, analyst at South Africa-based NKC.

“Consumer price inflation is forecast to slow in the near term owing to the continued strengthening of the Egyptian pound and the potential downward adjustment of domestic fuel price in line with global Brent crude oil prices, combined with some base effects,” she said.

Reporting by Ulf Laessing and Patrick Werr; Editing by Andrew Heavens

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