CAIRO- Egypt's central bank is expected to leave its main interest rates unchanged this week as it weighs the impact of an emergency 300 basis point cut two weeks ago to soften the economic impact of the coronavirus outbreak, a Reuters poll showed.
All but two of the 11 analysts polled thought the bank would keep rates steady at its regular monetary policy committee meeting on Thursday. The other two analysts forecast a 100 bps cut.
The bank first needs to gauge the effect of the 300 bps cut earlier this month before taking further steps, said Radwa El-Swaify, head of research at Cairo-based Pharos Securities Brokerage.
At the unscheduled meeting on March 16, the central bank described the easing as a preemptive move to support the economy in the face of the COVID-19 outbreak.
The bank's monetary policy committee cut the overnight lending rate to 10.25% from 13.25% and the overnight deposit rate to 9.25% from 12.25% - the lowest rates since early 2016, before Egypt embarked on a three-year IMF-backed economic reform programme.
Last year the most populous Arab country completed the reform programme, winning praise from economists, even though the nation of 100 million has struggled to attract foreign investment outside the hydrocarbons sector.
The coronavirus has all but closed Egypt's tourism industry, which generated a record $12.5 billion in the financial year to end-June.
Year-on-year headline inflation spiked as high as 33% in 2017 before gradually falling back. It slowed to 5.3% in February from 7.2% in January.
"Despite the decline in the inflation figure in February we believe that inflationary pressures could resume over the coming months," said Monette Doss, Chief Economist at HC Securities & Investment.
Doss cited "stocking up on staple and pharmaceutical products.. relatively higher demand during the month of Ramadan and possible supply shortages resulting from prolonged periods of lockdown."
Even before the coronavirus crisis, analysts had argued for interest rate cuts to stimulate sluggish private sector growth.
(Writing by Ulf Laessing; Editing by Kirsten Donovan) ((Ulf.Laessing@thomsonreuters.com; Reuters Messaging: follow me on twitter @ulflaessing))