Egypt’s central bank seen making fourth consecutive interest rate cut

The headquarters of Egypt's Central Bank are seen in downtown Cairo, Egypt January 11, 2018. (Reuters)
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Updated 14 January 2020

Egypt’s central bank seen making fourth consecutive interest rate cut

  • Analysts say inflation still low enough for further cuts
  • Central bank cut rates by combined 450 bps in 2019

CAIRO: Egypt’s central bank is likely to cut interest rates for a fourth consecutive time on Thursday, a Reuters poll showed, despite inflation rising in December.
Eight out of 11 economists surveyed by Reuters expected the Central Bank of Egypt (CBE) to cut rates. Four saw a 50 basis point cut and four predicted a 100 bps cut.
“With December inflation confirming inflation will normalize at 6-7%, we think the CBE has ample room to continue reducing interest rates,” said Mohamed Abu Basha of EFG Hermes, who predicted a 50 bps cut.
Egypt’s annual urban consumer price inflation rose to 7.1% year-on-year in December from 3.6% in November, though this had been expected as favorable base-year effects wore off.
Inflation had fallen as far as 3.1% in October, its lowest since December 2005. Month-on-month urban headline inflation stood at -0.2% in December from November, falling for a second consecutive month.
The CBE cut rates by a combined 350 basis points at its last three consecutive meetings, and 100 bps in February 2019. The overnight rates are at 12.25% for deposit and 13.25% for lending.
The bank’s monetary policy committee had been due to meet on Dec. 26 but the meeting was postponed to Jan. 16 pending the confirmation of committee members under governor Tarek Amer’s second four-year term.
“I expect to see the MPC of the Central Bank of Egypt continue the trend, seen over the last year, of cutting rates by 100 bps,” said Angus Blair of business and economic forecasting think-tank Signet.
“The main beneficiary of the cut in rates is the government, which will see greater and much-needed fiscal manoeuvrability, as well as a few stock market listed indebted companies.”
Radwa El-Swaify of Pharos Securities Brokerage was one of three economists to forecast that the CBE would hold rates steady.
“We expect the CBE to hold rates constant on Jan. 16, in light of the uptick in inflation, in order to assess the impact of the previous rate cuts, and in light of geopolitical unrest in the region,” she said.
Swaify added that the CBE would “start resuming a less aggressive easing cycle in 2020 whereby we expect a 200-300bps cut in rates over the course of the calendar year.”


At Davos, innovative products point to a sustainable future

Updated 24 January 2020

At Davos, innovative products point to a sustainable future

  • A single tree that to bear 40 different types of apple

DAVOS: The World Economic Forum is not all about the fourth industrial revolution or the rise of AI.

You can also find all manner of strange and intriguing products on display from biodegradable plastic made from algae to wallpaper made from recycled corn husks.

One stand titled “How do you design a tree?” is part of a conservation effort where a single tree is designed to bear 40 different types of apple.

Another stand displays colored seaweed on a rack, showing how clothes can be dyed in a sustainable, non-chemically corrosive manner.

Propped along a large wall is Fernando Laposse’s wallpaper made of variations of purple corn husks that are reinforced with recycled cardboard and cork to create wallpaper and furniture. The husks come from corn that needs very little water and can be grown in the desert, which makes it all the more sustainable.

“This initiative helps the local economy as it brings in jobs and a resurgence of crafts and food traditions while also ensuring sustainability,” Laposse said.

Another display shows a machine that extracts pellets from a mixture of algae and starch and is used to create a thread that is the base of 3D printing. These sustainable, biodegradable plastics made from algae are being experimented with in different regions.

With the rise of deep fakes — a branch of synthetic media in which a person in an existing image or video is replaced with someone else’s likeness — another stand delivers a warning on the looming dangers of unregulated software.

The Davos forum prides itself on its sustainability, and key topics have included climate, mobility, energy and the circular economy. Everything is recyclable, and participants must download an application in order to keep up with the program and any changes — a move to cut down on paper waste.