Egypt’s central bank sees rates hike to dampen price hike

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The headquarters of the Central Bank of Egypt is seen in downtown Cairo, Egypt, March 22, 2022. REUTERS/Mohamed Abd El Ghany

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CAIRO, Aug 15 (Reuters) – The Central Bank of Egypt (CBE) will raise its overnight deposit rate by 50 basis points (bp) on Thursday as it strives to contain inflation, according to forecasts from a Reuters poll.

The median forecast from a poll of 15 analysts is for the CBE to raise deposit rates to 11.75% and its lending rate to 12.75 at its regular monetary policy committee meeting.

The bank kept rates unchanged at its last meeting on June 23, but raised them by 200 basis points in May, saying it was seeking to contain inflation expectations after prices rose at their pace on fastest in three years.

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John Swanston of Capital Economics said the continued depreciation of the Egyptian pound and the expectation of fuel price increases would likely increase inflation.

“This will prompt policymakers to raise interest rates by 50 basis points at next Thursday’s meeting,” he said.

Annual urban consumption inflation in Egypt accelerated to a higher than expected 13.6% year-on-year in July from 13.2% in June. Core inflation jumped to 13.3% in May from 11.9% in April. Read more

The central bank has an inflation target range of 5-9%, but in June it said it would tolerate a higher level until after the fourth quarter.

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Reporting by Patrick Werr, editing by Ed Osmond

Our standards: The Thomson Reuters Trust Principles.

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