The Central Bank of Egypt on Wednesday called off a March 28 meeting of its Monetary Policy Committee (MPC), saying it had done enough at its special meeting held on March 6 when it hiked key interest rates by 600 basis points.
The apex bank said on March 6 that the interest rate rise was meant to accelerate the monetary tightening process and ensure a decline in underlying inflation.
The central bank set its overnight lending rate at 28.25% and its overnight deposit rate at 27.25% adding that it would let the Egyptian pound trade freely.
A statement on the Bank of Egypt’s website revealed that the next scheduled Monetary Policy Committee meeting is set for May 23.
North Africa’s largest economy currency hit a record low against the dollar after the announcements, while the Egyptian sovereign dollar bonds rallied.
It weakened below 50 Egyptian pounds to the dollar, far beyond previous records, from about 30.85 pounds, a level Egypt has for months tried to defend. The Egyptian currency closed at 46.95 to the dollar on Wednesday.
Egypt’s central bank deputy governor, Rami Aboul Naga said interest rates will fall again, as the tightening cycle is temporary.
Aboul Naga added that Egypt’s balance of payment should gradually improve after the MPC unscheduled meeting.
