Egypt's central bank keeps overnight rates on hold
Central Bank of Egypt. /VCG

Central Bank of Egypt. /VCG

Egypt's central bank left its overnight interest rates unchanged on Wednesday, saying inflation had stabilized and the economy was showing signs of recovery after more than a year of the coronavirus pandemic.

The decision, which most analysts had anticipated, leaves real Egyptian interest rates at one of the highest levels in emerging markets.

The central bank's monetary policy committee (MPC) kept the overnight lending rate at 9.25 percent and the overnight deposit rate at 8.25 percent for a fourth consecutive time, after cutting rates in September and November.

By comparison, the average yield on a three-month Egyptian treasury bill was 13.135 percent at an auction this week.

The MPC met one day earlier that initially scheduled after the government moved the Sinai Liberation Day holiday to Thursday from Sunday to give Egyptians a longer weekend.

The MPC said headline inflation had stabilized at 4.5 percent in February and March, and the global economy was showing signs of recovery.

"Some leading indicators point towards a resumption of recovery towards their pre-pandemic levels," the MPC said in a statement accompanying its decision.

"Meanwhile, the unemployment rate stabilized at 7.2 percent during 2020 Q4, compared to 7.3 percent during the previous quarter.”

All but one of 20 analysts polled by Reuters predicted the committee would leave rates on hold.

The central bank lowered its benchmark rate by 50 bps in each of September and November and by 300 bps at the outbreak of the pandemic in March 2020. They are now at their lowest since July 2014.

The MPC in December narrowed its inflation target to 5-9 percent from the previous 6-12 percent.

(With input from agencies)

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