The Monetary Policy Committee (MPC) of the Central Bank of Egypt (CBE) decided on Thursday evening to keep basic return prices at the latter during the last meeting when previous CBE governor Hisham Ramez resigned.
Basic return prices at CBE are used to determine the interest rates on the Egyptian pound in deposit, lending, and bank operating in the Egyptian market.
According to CBE, the overnight deposit rate is kept at 8.75%, overnight lending rate kept at 9.75%, while the rate of CBE’s main operation and the discount rate remain at 9.25%.
“MPC’s decision was largely expected in light of CBE’s keenness to stimulate investment and get the economy moving and not to increase the burden of domestic debt,” said Haitham Abdel-Fattah, Director General of Treasury at Industrial Development & Workers Bank of Egypt (IDBE).
He added CBE might not raise the basic interest rate until the end of 2015, especially since the official data indicated that inflation declined, allowing CBE to keep inters rates unchanged.
According to Dalia Wahba Vice Chairman of the treasury sector in the Arab investment Bank (AIB), they are now in a transitional phase since there is a transition of CBE governors. In such circumstances, no important decisions, such as setting interest rates on the pound, are usually taken.
CBE revealed the stability of the annual rate of core inflation at 5.55% in September, unchanged from the previous month of August. The core inflation registered a monthly rate of 0.79% in September, compared to a negative rate of 0.23% in August.
It made a statement the decision of keeping the rates, while investments in domestic mega projects are expected to contribute to economic growth. The downside risks and uncertainty that surround the global economy on the back of softening growth in emerging markets and challenges facing the Euro Area could pose downside risks to domestic GDP.