Cairo – Mubasher: The Central Bank of Egypt (CBE) is expected to stop reducing interest rate as the government will cut fuel subsidies next July.
The CBE’s decision last Thursday was a must, economist at CI Capital Holding Noaman Khalid said in a broadcast call to CBC channel, emphasising that tight monetary policy has ended.
The Egyptian government will slash fuel subsidies next July, which in return will drive prices to rise by a range between 40% and 50% and inflation will grow to 15.5% or 16%, the economist highlighted.
Fuel prices will not fall again after their increase and the government will be obliged to raise salaries to compensate that hike, he pointed out.
Last Thursday, the CBE's Monetary Policy Committee (MPC) has decided to reduce interest rates by 100 basis points or 1%.
The overnight deposit and lending rates stood at 16.75% and 17.75%, respectively, while the main open market rate was lowered to 17.25%.
