CBE leaves interest rates unchanged, says it already moved preemptively: The central bank’s Monetary Policy Committee (MPC) decided to keep interest rates unchanged during its last meeting of 2016, moving with market expectation. The overnight deposit rate remains at 14.75% and the overnight lending rate at 15.75%. The CBE had increased rates by a total of 550 bps during the year.

“Annual inflation is expected to narrow after being impacted by transitory cost push factors stemming from the economic reform measures,” the MPC explained in one of its most thorough statements (pdf). Looking ahead, the central banks sees “developments in the external environment show that there has been some firming of international commodity prices, while low global inflation and subdued global growth maintain weak pressures on domestic prices, respectively… broad and reserve money growth are likely to be impacted going forward by the phasing out of monetary financing of the fiscal deficit as well as by relatively higher foreign reserves accumulation. Moreover, broad money growth is strongly affected by the revaluation effects of its foreign currency components.” The MPC reiterated it will not hesitate to adjust the rates to ensure price stability in the medium term, adding that it had acted preemptively on 3 November to raise the rates by 300 bps.

…The central bank also had some good news for local companies: Egyptian companies unable to repay USD-denominated debt after the EGP float will be allowed to negotiate fixed exchange rates with banks, Bloomberg reported. “Companies need to negotiate individually with lenders to agree on a fixed exchange rate that will be used to finance their debts, Federation of Egyptian Industries [FEI] Deputy Chairman Tarek Tawfik said in a phone interview, citing an agreement with the central bank.” Companies had called for intervention saying banks are asking them to pay for letters of credit initiated before the EGP was devalued at post-float exchange rates. The FEI also said the agreement with the CBE allows for outstanding foreign currency debts to be repaid in instalments over one to three years, according to Ahram Online.