Egypt Daily News – During the seventh Monetary Policy Committee meeting for this year on Thursday, the Central Bank of Egypt kept interest rates unchanged at the highest historical level, for the fifth time in a row, in line with market expectations.
The deposit yield is 27.25%, the overnight lending rate is 28.25%, and the Central Bank of Egypt’s main operation rate is 27.75%.
The Central Bank of Egypt indicated in the statement accompanying Thursday’s decision that “expectations indicate stability in inflation at its current levels until the end of 2024, although it is surrounded by some upward risks.”
It added, “Inflation is expected to decline significantly starting from the first quarter of 2025, with the cumulative impact of monetary tightening decisions and the positive impact of the base period being achieved.”
12 investment banks in Egypt, whose opinions were polled and unanimously agreed that the Central Bank will keep the interest rate unchanged, with consumer prices returning to a recent rise, amid signs of upward risks surrounding the path of inflation in the future, and in light of the ambiguity regarding the pace of measures agreed upon with the International Monetary Fund, and continuing geopolitical tensions.
Last March, the Central Bank raised interest rates by 600 basis points, with the aim of curbing inflation, increasing interest rates by a total of 1,900 points from March 2022 until now.
Inflation monitoring
The pace of inflation in Egypt’s cities accelerated slightly in October to 26.5%, on an annual basis, compared to 26.4% in September, according to data from the Central Agency for Public Mobilization and Statistics.
However the core inflation rate, which excludes goods with highly volatile prices such as vegetables and fruit, slowed to 24.4% in October from 25% last September. These rates are far from the targets of the Central Bank of Egypt, which range from 5% to 9%.
Muhammad Abu Basha, chief economist at EFG Holding, told Al-Sharq: “Our expectations were to keep the interest rate unchanged, with the aim of strengthening the downward path of inflation and achieving price stability in the medium term, especially since inflation readings are still high and affected by the repercussions of “Control public finances,” referring to partially lifting subsidies on some goods and services.
At the end of July, the Egyptian government increased the prices of gasoline, diesel, and train and metro tickets, followed by increases in the prices of many other goods and services.
