Egypt Daily News – Egypt’s Central Bank’s has decided to maintain interest rates at 27.25% for the overnight deposit rate and 28.25% for the lending rate is influenced by several key factors:
Inflation Trends: A decline in inflationary pressures, with a decrease in overall annual inflation to 25.7% and core inflation to 24.4%. This marks five consecutive months of decline, suggesting that previous monetary policy tightening is taking effect and inflation is returning to more stable levels.
Economic Conditions: The economic growth rate has slowed, with real GDP growth for the first quarter of 2024 recorded at 2.2%, slightly down from the previous quarter. Despite this slowdown, there are indications that growth may begin to rebound in the second quarter of 2024.
Risks and Uncertainties: There are upward risks to inflation, including global oil supply declines and geopolitical tensions, which could affect economic stability. The committee aims to keep interest rates stable while monitoring these uncertainties.
Capacity and Employment: Real economic activity remains below productive capacity, which supports a downward trend in inflation. The unemployment rate has decreased slightly, driven by improvements in the agricultural sector.
Medium-Term Goals: The committee expressed its intent to maintain a close watch on economic developments and inflation forecasts. The decision to keep interest rates unchanged is seen as appropriate as the bank aims to ensure that inflation decreases significantly and sustainably before considering further adjustments.
Overall, the Central Bank’s approach reflects a cautious balance between supporting economic growth and managing inflation risks, while monitoring both local and global economic indicators.
