Cairo: Egypt's central bank is expected to keep interest rates unchanged at its next policy meeting and hold back on more rate cuts this year until inflation steadies, a Reuters poll showed on Tuesday.
Twelve economists polled by Reuters said the Central Bank of Egypt (CBE) was likely to maintain its deposit and lending rates at 16.75 and 17.75 per cent when it meets on Thursday.
They said the bank was unlikely to further cut rates after slashing them by 200 basis points earlier this year, until inflation cools following a jump in June on the back of price hikes to energy and transportation.
"We expect the Central Bank of Egypt to opt for stable rates awaiting signs that the headline monthly inflation numbers have stabilised," said Mohamed Abu Basha, head of macroeconomic analysis at EFG Hermes.
After rising in June, annual inflation dipped in July, with headline inflation slowing to 13.5 per cent from 14.4 per cent in June and core inflation, which strips out volatile items like food, falling to 8.54 per cent from 10.9 per cent, the first single-digit reading since April 2016.
Import-dependent Egypt has been battling inflation that ran as high as 35 per cent last year after it floated its currency in late-2016, part of a three-year $12 billion IMF loan programme that includes other price rising measures such as cuts to electricity and fuel subsidies.
The central bank hiked its key interest rates by a total of 700 basis points as prices climbed after the float but has eased them by 200 points since February as inflation edged closer to single digits.
Still, economists said the bank would likely hold off on further cuts as it eyed the impact of the latest energy subsidy cuts, with a view to further easing before year-end.
"The Central Bank of Egypt would prefer seeing through the full impacts of the recent subsidy cuts before shifting the gear on monetary policy," said head of research as Naeem Brokerage Allen Sandeep.