Friday, February 3, 2012

Central Bank of Egypt Holds Rate at 9.25%

The Central Bank of Egypt held its overnight deposit rate unchanged at 9.25%, and the overnight lending rate at 10.25% and 7-day repo at 9.75%.  The Bank said: "Looking ahead, the current political transformation may continue to have ramifications on both consumption as well as investment decisions, adversely weighing on key sectors within the economy. Moreover, downside risks surrounding the global recovery have mounted on the back of fiscal and banking sector challenges facing the Euro Area and possible spillovers to other regions. These factors, combined, pose downside risks to domestic GDP going forward."

Previously the Bank maintained its interest rates unchanged when it announced policy settings in October this year.  Egypt reported annual consumer price inflation of 9.55% in December, up from 8.21% in September, 8.49% in August, 10.4% in July, compared to 11.8% in June, 11.9% in May, and down from 12.1% in April.  The toll of the revolution was seen as Egypt's gross national product contracted by 4.2% year-on-year in the third quarter of the 2011/2012 fiscal year and investment fell 26% due to uncertainty arising from the political upheaval.

Real GDP expanded by 0.3% in Q1 2011/2012 (0.4% in Q4 2010/2011), full year GDP growth was 1.8% in 2010/2011 vs 5.1% in the 2009/2010 year.  The Egyptian pound (EGP) has weakened about 3% against the US dollar over the past year, while the USDEGP exchange rate last traded around 6.03


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