CBE delays interest rate decision until December 24

The Central Bank of Egypt’s (CBE) Monetary Policy Committee has announced it will postpone a much-anticipated interest rate decision that was scheduled to be issued Thursday.

Citing the need for “full coordination and commitment on macroeconomic objectives with the government,” the committee said it would reconvene December 24 in a statement released Thursday afternoon.

Analysts have been eagerly awaiting an interest rate decision as they look for clues about the general policy direction new Central Bank Governor Tarek Amer intends to pursue.

A November increase in interest rates for deposits at government-owned banks led to speculation in some quarters that the CBE would increase its own benchmark rates, signaling a shift toward a contractionary policy aimed at easing inflation.

Doing so would put the CBE in line with the US Federal Reserve Bank, which announced Wednesday its first increase in nearly a decade.

In addition to high inflation, however, Egypt faces high unemployment, unsteady economic growth and a weakening currency — leaving room for argument that the CBE could also elect to hold interest rates steady, or perhaps even lower them.

The delay in issuing an interest rate decision means that investors and economists will have to wait longer for a clear signal from Amer.

However, the CBE has made one thing clear in its announcement: it intends to work more closely with the Cabinet. Amer’s predecessor Hesham Ramez was criticized for failing to coordinate with Egypt’s other economic authorities, and at times found himself in public conflict with ministers.

The CBE announcement noted that a meeting of the bank’s coordinating council, also scheduled for Thursday, would proceed as planned. Senior figures including former Central Bank Governer Farouk al-Oqda and prominent economist Mohamed al-Erian were recently appointed to the council, which is responsible for liaising with the government to set policy goals.

Targets for fiscal consolidation, current account performance and “urgent structural economic reforms” are among the objectives to be discussed by the coordinating council, the Bank noted.

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