Central Bank of Egypt Holds Rates Steady

CAIRO (Reuters) – The Central Bank of Egypt (CBE) will maintain its overnight interest rates during its monetary policy committee meeting on Thursday, amid declining inflation, according to analyst forecasts.

The CBE kept rates steady during its previous two meetings on July 18 and May 23, citing slow economic growth but a decrease in inflation.

On March 6, the bank increased rates by 600 basis points (bps) as part of an $8 billion agreement with the International Monetary Fund (IMF), totaling 800 bps in increases this year.

A poll of 15 analysts indicated a consensus that the central bank would keep its deposit rate at 27.25% and its lending rate at 28.25%. Only one analyst predicted a 100 bps decrease.

James Swanston from Capital Economics stated, “We anticipate interest rates being left on hold by the CBE given inflation remains well above target.” He noted that while inflation momentum is improving, attention will shift to potential rate cuts, with expectations set for Q1 2025.

Inflation fell to 25.7% in July, marking the first positive real interest rate since January 2022. The rate dropped from a peak of 38% in September to 27.5% in June.

The monetary policy committee has set a target of below 9% inflation by the end of 2024.

In March, the Egyptian government allowed its currency to weaken to under 50 to the dollar as part of its IMF agreement, after previously fixing it at 30.85 for a year. The Egyptian pound has since strengthened to approximately 48.6 to the dollar.