CAIRO, March 30 (Reuters) – The Central Bank of Egypt (CBE) will leave its overnight interest rates steady when it meets on Thursday as fears of rising inflation triggered by the U.S.-Israeli war on Iran upended a planned gradual easing cycle, a Reuters poll showed on Monday.
All 17 economists surveyed in the poll unanimously forecast that the central bank’s Monetary Policy Committee would keep its deposit rate at 19.0% and its lending rate at 20.0%.
Egypt’s energy import bill has more than doubled since the outbreak of the war, Prime Minister Mostafa Madbouly said this month.
Important sources of income such as tourism, Suez Canal tolls and remittances from Egyptians working in Gulf countries could also be hurt.
“Any further rate cuts are on hold for the foreseeable future,” said Daniel Richards of Emirates NBD. “We don’t think the time has come for hikes just yet, until there is further clarity around the inflationary pass-through of the Iran war.”
Egypt’s annual urban consumer price inflation jumped to a higher-than-expected 13.4% in February from 11.9% the month before, still down from a peak of 38% in September 2023. March inflation figures are due out late next week.
“Strong inflation in February, fuel price hikes, and an uncertain external environment will lead to a more cautious CBE,” said Ivan Burgara of banking trade group IIF.
The central bank began easing rates last April after having jacked the lending rate up to 27.25% as part of an $8 billion financial support package with the International Monetary Fund in March 2024, when it also slashed the exchange rate of the Egyptian pound against the dollar.
(Reporting by Patrick Werr, Editing by William Maclean)
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