Beltone, HC expect CBE to keep interest rates unchanged on Thursday

Beltone Financial and HC Securities and Investment have expected interest rates to be kept unchanged by the Central Bank of Egypt (CBE) on Thursday.

The CBE's monetary policy committee (MPC) is to hold its fifth regular meeting this year to discuss the fate of the basic interest rate, which is considered the most important indicator of the direction of interest rates in the Egyptian market in the short term.

In its meeting held on 28 June 2018, MPC kept rates unchanged at 16.75% for deposits, 17/75% for lending, 17.25% for main operations and 17.25% for credits and discounts.

According to the research department of Beltone Financial, the committee is expected to decide to keep the interest rates at the same level on Thursday.

"We expect the annual rate of inflation in June to reach 14.4%, which will continue through the end of 2018. This is still within the CBE's target of 13% ±3%," Beltone said, adding, "meanwhile, returns stabilized at above 18%, making them attractive for investors among other emerging markets."

Beltone noted that annual rates of inflation fell in July to 13.5%, from 14.4% in June, compared to estimates of 13.7%.

They explained that this decline was driven by easing fuel price hikes impact, which took place in the middle of July. This also curbed the inflation rate increase in transportation to 40.5% in July, compared to 55.1% in June. The food commodities inflation also fell to 9.6% against 10.1% in June, as global prices fell.

"The monthly inflation rate rose by 2.4% compared to 3.5% in June, in line with our estimate of 2.6%," Beltone said.

It attributed this monthly rise to higher prices in the alcohol and cigarette sector, where a price increase was imposed on cigarettes on 12 July.

MENAFN1608201801530000ID1097301312