Egypt News

“We believe the Central Bank of Egypt will hold on rates for the remainder of the year,” Reham El-Desoki, a senior economist at investment bank Beltone Financial, said in an e- mailed statement before the announcement. Inflation in the second half of the year may accelerate, El-Desoki said.

Egypt’s M2 money supply growth, an indicator of future inflation, rose to 8.5 percent in May from 6.8 percent in April. Food prices usually rise ahead of the holy Muslim month of Ramadan, during which Muslims hold large banquets after breaking their fasts at sunset. Food makes up 47 percent of the consumer price index in Egypt. Ramadan begins in the second half of August.

Central Bank of Egypt lowered its overnight deposit rate by half a percentage point in June to 9 percent, the fourth cut this year. The bank reduced its overnight lending rate by the same measure to 10.5 percent. It will meet again on July 30 to review its rate decision.

The impact of the cut was blunted as the majority of banks did not lower their interest rates “to avoid further deterioration in returns on deposits for the household sector,” Beltone Financial said.

The Egyptian economy probably grew by as much as 4.7 percent in the fiscal year that ended last month, Finance Minister Youssef Boutros Ghali said on July 5, as the Global Financial Crisis hurt revenue from tourism and the Suez Canal. The economy expanded 7.2 percent in the previous year.

EGYPT NEWS

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