Credit: REUTERS/MOHAMED ABD EL GHANYBy Malaika Tapper
June 14 (Reuters) - Egypt's central bank will likely leave its overnight interest rates steady at a meeting on Thursday, a Reuters poll showed, as increased commodity prices and domestic inflation counteract any pressure for a reduction.
All 18 analysts polled believed the Central Bank of Egypt (CBE) would keep rates unchanged at its regular monetary policy committee meeting.
The lending rate has been at 9.25% and the deposit rate at 8.25% since November, their lowest since July 2014.
The bank cut its rates by 50 basis points in each of November and September after having slashed them by 300 points in March 2020 to confront fallout from the coronavirus pandemic.
"The latest inflation report showing an acceleration to 4.8%, combined with the global picture of rising prices and concerns about imminent tightening, makes the CBE likely to err on the side of caution once again," said Daniel Richards of Emirates NBD.
Some analysts say Egypt's real interest rates, among the highest in emerging markets, give the central bank scope for a rate decrease to boost growth.
Urban consumer inflation climbed to 4.8% in May, its highest level this year. The figure remained below the 5% to 9% target range set by the central bank in December.
"The surge in global food prices has already started to feed domestic inflation as the government had to raise the prices of subsidized cooking oil by the end of May," said Mona Bedir of Prime Holding.
"Pressures also were building up at firms as the strains in global supply chains are deepened by the shortages of intermediary products and supply bottlenecks," she said.
A draft budget sent to parliament in April forecast 7% inflation in the financial year that begins on July 1. It also predicted economic growth quickening to 5.4% from this year's expected 2.8%.
(Reporting by Malaika Tapper; Editing by Patrick Werr and Giles Elgood)
((Malaika.Tapper@thomsonreuters.com;))
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