CAIRO: The Central Bank of Egypt’s (CBE) is scheduled to consider deposit and lending rates Thursday, according to meetings’ schedule posted on its website.
In a previous meeting in January, the CBE’s Monetary Policy Committee (MPC) decided to cut the overnight deposit and lending rates by 50 basis points to 8.75 percent and 9.75 percent respectively, despite forecasts that rates may remain unchanged.
The rate of the CBE’s main operation and the discount rate were also slashed by 50 basis points to 9.25 percent each, according to a statement posted on the CBE’s official website.
Shortly after January’s interest rate cut, the CBE began to let the Egyptian pound depreciate against the U.S. dollar in 10 consecutive depreciations in a fight against the black market starting Jan. 18.
“Over the past three weeks, the pound has held steady against the dollar officially. The pound strengthened on the black market Tuesday as it was changing hands at 7.65 EGP per dollar, a very close level to the official market as banks now sell the hard currency at 7.63 EGP,” a dealer told The Cairo Post Tuesday.
Meanwhile, banking experts urged the central bank to increase the interest rate on local currency deposits to combat dollarization and reduce cash liquidity, in order to restrain inflation pressures that may occur due to the local currency slip against the dollar in a country importing more than 60 percent of its needs.
January’s cut was the first action since raising policy rates by 100 basis points each last July, in an attempt to control soaring inflation after the government slashed fuel subsidies by up to 78 percent.
The CBE attributed the last cut to seasonal decline in the prices of fruits and vegetables coupled with the decline in prices of food items backed by the decrease in international prices.