Egypt's central bank postponed any policy decisions at today's scheduled meeting but said its Monetary Policy Committee will reconvene on Thursday, Dec. 24.
The Central Bank of Egypt (CBE), which has cut its benchmark overnight deposit rate by 50 basis points this year to 8.75 percent, said in a statement that it would hold talks with the government on Dec. 17 in order to coordinate policy.
Tarek Amer took over as new governor of the CBE this month and last Sunday the central bank injected more foreign currency liquidity into the banking system in a surprise operation. The CBE offered banks dollars at a rate of 7.7401 Egyptian pounds, it's official selling price.
Markets had been expecting an injection of dollars after Amer told the government he intended to supply banks with dollars as a shortage of foreign currency had curbed imports and manufacturing.
Since being named as governor in late October, Amer has taken several steps to supply banks with U.S. dollars.
On Dec 1, when he took over, the CBE repayed foreign portfolio investors $547.2 million to clear a backlog and changed the way U.S. dollars would be allocated to be based on bank's trade obligations.
Under its previous governor, the CBE kept the Egyptian pound in a narrow band and limited the amount of dollars that companies could deposit in banks to help control inflation and eliminate a black market for dollars.
But the strategy made it hard for manufacturing companies to pay for imports and discouraged foreign investors who feared the could not repatriate profits.
Egypt's inflation rate rose to 11.1 percent in November from 9.7 percent in October.
The Central Bank of Egypt issued the following statement:
"In its meeting on December 17, the MPC decided to reconvene on Thursday 24,
The CBE is keen on fulfilling its mandate of price stability for the purpose of
sustainable economic growth and job creation. This mandate is only achievable
through full coordination and commitment on macroeconomic objectives with the
government, including targets for fiscal consolidation, current account outturns and
the implementation of urgent structural economic reforms.
The CBE will discuss with the government these objectives during the first
Coordinating Council meeting scheduled on December 17."