Egypt’s central bank keeps interest rates unchanged

Ahram Online , Thursday 21 Sep 2023

The Central Bank of Egypt (CBE) decided to maintain interest rates at current levels during its meeting on Thursday.



The CBE’s Monetary Policy Committee (MPC) kept the overnight deposit rate, overnight lending rate and the rate of the main operation at 19.25 percent, 20.25 percent and 19.75 percent, respectively. 

The discount rate remained at 19.75 percent.

The pause on interest rate change comes after 12-percent hikes since March 2022.

"While annual food inflation is still increasing, it is being driven by volatile items as opposed to core food items as in earlier months. Accordingly, inflation dynamics for both July and August 2023 mainly reflect the combined effect of supply chain disruptions and adverse weather conditions, which drive seasonal price increases on agricultural products," the MPC said in a statement.

"As incoming data since the August MPC meeting - including recent inflation outturns - came broadly in line with expectations, the MPC has decided to keep policy rates unchanged. The committee will continue quantitatively assessing the cumulative impact of previously enacted tightening policies on the economy," the statement concluded.

Expert analysis

The CBE’s decision met the expectations of a group of experts who believed the bank would wait for its previous increases to affect inflation before applying another increase.

Egypt’s annual headline inflation accelerated to a record 37.4 percent in August from its previous record the month before of 36.4 percent, according to the Central Agency for Public Mobilisation and Statistics (CAPMAS).

The monthly inflation rate declined, however, to around 1.6 per cent in August from around 1.9 per cent in July.

The CBE set two targets for inflation; the first is seven percent plus or minus two percent on average, by the fourth quarter of 2024. The second is five percent, plus or minus two percent on average, by the fourth quarter of 2026.

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