Economists differ on interest rate decision amid Egypt's record core inflation

Five economists surveyed by Ahram online had different predictions on whether Egypt's central bank would raise or hold interest rates at its next Monetary Policy Committee (MPC) on Thursday.

Two of the five economists believe the MPC will raise rates to curb the growing inflation.

The core consumer price index (CPI) that the Central Bank of Egypt (CBE) uses to measure the level of prices after excluding the volatile cost commodities such fruits and vegetables hit a seven year-high jumping to 12.2 percent in May from 9.5 percent in the previous month.

Meanwhile, headline CPI increased to 3.2 percent in May compared to1.5 percent in April, the steepest monthly increase in roughly two years, driving up annual inflation to register 12.9 percent against 10.9 percent the month before.



“Food prices have been rising at a rapid pace for several years. This pattern is not a transitory phenomenon and reflects both consumption demand and supply constraints,” Garbis Iradian, a chief economist at the Washington-based Institute of International Financetold Ahram Online in emailed comments.
Eman Negm, an economist at Cairo-based Prime Holding, said the CBE will probably raise rates by 50 basis points in an attempt to curb growing core inflation.