Egypt’s central bank seen holding key interest rates

Egyptians walk in front of the Egyptian Central Bank in Cairo. (AP)
Updated 11 July 2019

Egypt’s central bank seen holding key interest rates

  • Egypt's economy had been struggling to recover from the turmoil that followed its 2011 uprising

CAIRO: Egypt's central bank is likely to maintain interest rates at their current level on Thursday, a Reuters poll showed, as analysts foresaw a spike in inflation after a hike in fuel prices last week.
Of 15 economists surveyed by Reuters, 14 said the bank's monetary policy committee was unlikely to change its overnight rates, with deposits at 15.75% and lending at 16.75%.
"Higher domestic fuel and electricity prices in July will raise inflationary pressures further in H2," said Nadene Johnson, an economist at NKC African Economics.
"Nonetheless, there appears to be limited demand-side inflationary pressure because of low real earnings, which could mitigate some of the expected supply-side inflation."
Scaling back fuel subsidies that have strained the budget for decades was a key plank of a three-year, $12 billion reform package signed with the International Monetary Fund in 2016.
Egypt's economy had been struggling to recover from the turmoil that followed its 2011 uprising.
Other measures agreed under the loan include a sharp devaluation of the currency and the introduction of a value-added tax.
"Inflation edged higher in May and upcoming reform measures (fuel/energy subsidy cuts) will likely keep the CBE on a holding pattern over the next few months," Bryan Plamondon, IHS Markit global economics director focusing on the Middle East and North Africa, said before the fuel price hikes on Friday.
The poll was conducted from June 30 to July 8.
Headline inflation accelerated to 14.1% in May from 13% in April. It had fallen in April from 14.2% in March.
Core inflation, which strips out volatile items such as food, fell in May to 7.8% from 8.1% the previous month.
"Inflation will spike MoM (month-on-month) in July-September, but the annual rate will be supported by the base effect, capping the reading at 14-15%," said Radwa El-Swaify, head of research at Pharos Securities Brokerage.
"In light of the delay in energy subsidy cuts, and the fact that June has passed without any movement in energy prices, we expect June inflation to record c. 1.0-1.5% MoM and 11.2-11.8% YoY, which will be a significant drop in inflation."
The government had told the IMF it would remove subsidies entirely from most fuel products by June 15 after increasing fuel prices steadily over the past four years.
It did not explain the delay, but austerity measures are politically sensitive and have dented the popularity of President Abdel Fattah al-Sisi.
The central bank kept interest rates steady at its last two meetings, in May and March, after a surprise 100 basis points cut in February.
Several analysts said the CBE was likely to wait until the fourth quarter of 2019 to cut rates, given the impact of the fuel subsidy cuts and concerns over global trade.
"We now expect the next window to cut the bank rates is several months away," said Angus Blair, chairman of business and economic forecasting think-tank Signet.
NKC's Johnson said: "The dovish stance by the US Fed supports further rate cuts by the CBE in the coming year."

Britain to ban ‘gagging’ clauses used to silence harassment victims

Updated 8 min 9 sec ago

Britain to ban ‘gagging’ clauses used to silence harassment victims

  • Employees who sign NDAs are to be given independent legal advice under the legislation

LONDON: Britain will ban employees from using nondisclosure agreements (NDAs) that prevent victims of workplace harassment from speaking to police, lawyers and health care workers about their abuse.

Nondisclosure agreements (NDAs), also known as workplace “gagging clauses,” are often used in commercial transactions to protect company information and trade secrets.

But the deals were thrust into the spotlight by the sexual assault scandal that engulfed Hollywood director Harvey Weinstein in 2017. He used NDAs as part of settlements with alleged victims.

The proposed new laws, announced by Britain’s government on Sunday, will ban NDAs that stop people disclosing information to the police, doctors or lawyers.

Employees who sign NDAs are to be given independent legal advice under the legislation.

“As we have seen in the news recently, there are a handful of employers using NDAs to cover up criminal acts in the workplace, including sexual harassment, assault and racist discrimination,” said Kelly Tolhurst, Britain’s minister for small business.

“The new legislation will stamp out misuse, tackle unacceptable workplace cultures (and) protect individuals,” she said in a statement on Sunday.

Confidentiality agreements have come under increased scrutiny in Britain amid the global "Me Too" movement against sexual harassment and assault.

A British parliamentary committee launched an enquiry in November to examine whether NDAs should be banned or restricted, how easily victims can access legal aid, and if companies should be forced to report on types and numbers of NDAs used.

“The use of NDAs is only part of the problem of workplace harassment and discrimination, and employers must step up to protect their employees from this appalling behavior before it happens,” said Rebecca Hilsenrath, head of Britain’s Equality and Human Rights Commission.

In Britain, 40 percent of women and 18 percent of men experienced sexual harassment in the workplace, from catcalls to sexual assault, polling firm ComRes found in 2017.

United Nations agency The International Labour Organization in June adopted a new treaty against violence and harassment in the workplace.