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Egypt's interest rates unchanged for 13th consecutive time

Deposit and overnight lending rates remain the same, and the discount rate is also unchanged

Ahram Online, Thursday 28 Apr 2011
Bread vendors pull their trolley to their shop in Cairo, Egypt (AP / Victoria Hazou)

In its meeting held yesterday, 28 April, the Monetary Policy Committee (MPC) of the Central Bank of Egypt (CBE) decided to keep the overnight deposit rate and overnight lending rate unchanged at 8.25 per cent and 9.75 per cent respectively, the Cairo-based central bank said in a statement on its website today.

It is the 13th time in row to keep interest rates unchanged. The discount rate was also kept unchanged at 8.5 per cent.

The CBE has decided to launch regular repurchasing agreements (repo) as part of its monetary policy operational framework every Tuesday, starting 22 March. The main open market operation will be a seven‐day repo set by the MPC at 9.25 per cent, the press release added.

The decisions meet expectations by economists and experts.

"In the CBE’s second MPC meeting post-revolution, we expect policy rates to be kept unchanged at the current levels" investment bank Beltone Financial said in a press release today.

A poll by Reuters conducted yesterday showed eight out of nine economists forecast the CBE's MPC would leave its overnight lending and deposit rates unchanged to combat inflation and support economic growth. One economist sees a 50 basis point cut.

The CBE's Policy Committee, consisting of nine members comprising of the Governor of the CBE, the two Deputy Governors, and six members of the Board of Directors, is responsible for the formulation and implementation of monetary policy, with price stability being the primary and overriding objective.

The committee has since 2005 introduced the interest rate corridor; two standing facilities, the overnight lending and the overnight deposit facility, with the aim of defining the ceiling and floor of the corridor. By setting the rates on the standing facilities, the MPC determines the corridor within which the overnight rate can fluctuate. Effectively, steering the overnight interbank rate within this corridor is the operational target of the CBE.

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