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Accordingly, the overnight deposit rate, overnight lending rate, and the rate of the main operation remained unchanged at 19.25 percent, 20.25 percent, and 19.75 percent, respectively. The discount rate was also kept unchanged at 19.75 percent.

Since March 2022, the CBE hiked the key interest rates by a total of 11 percent (1100 bps).

The CBE attributed its decision on Thursday to September’s reading of the country’s core inflation which indicated positive development.

Egypt’s core inflation, calculated by the CBE, declined for the third consecutive month to register 39.7 percent in September 2023, down from 40.4 percent in August 2023. 

For the headline inflation, which kept its upturn in September, CBE said that the reading came within the expectations.

Annual urban headline inflation continued its upward trend reaching 38 percent in September due to higher food inflation while non-food inflation softened. 

“For the third consecutive month, the increase in food inflation came due to higher prices of volatile food items as opposed to core food items in earlier months. Accordingly, inflation dynamics for the past three months ending in September 2023 mainly reflect the effect of adverse weather conditions, which further amplified the seasonal increase in the prices of agricultural products," the CBE explained.

Moreover, Egypt’s real GDP growth remained unchanged in the first quarter of 2023 from the previous quarter at 3.9 percent.

In this respect, the CBE said that the economic activity was mainly supported by the positive contributions of consumption and net exports. 

“Exports have been the main driver of real growth since the first quarter of 2022 on average, which comes in line with exchange rate developments. Furthermore, real GDP growth is estimated to slow down during FY2022/2023 compared to the previous fiscal year, which registered 6.7 percent. Leading indicators for 2023 Q3 suggest a general stability in economic activity compared to the second quarter of 2023," according to the CBE.

Meanwhile, the unemployment rate slightly declined to 7.0 percent in the second quarter of 2023 compared to 7.1 percent in the previous quarter, mainly due to an increase in employment, absorbing new entrants into the labor market.

On a global level, the CBE said that forecasts for key international commodity prices, chiefly energy, have increased due to rising geopolitical tensions in the region. 

However, inflationary pressures have eased worldwide as a result of monetary policy tightening cycles in major economies, as well as favourable base effects, according to the CBE.

Consequently, according to the CBE, forecasts for headline inflation in key global economies have been revised down, yet are still expected to remain above their respective target levels. 

Moreover, the outlook for global economic growth has decreased compared to the previous meeting given the impact of continued global policy rate tightening on demand, as well as increasing geopolitical uncertainty in the region.

“In light of the above, the MPC decided to keep policy rates unchanged and to continue assessing the cumulative impact of previously enacted tightening policies and its transmission to the economy in a data-driven manner," the CBE stated.

The MPC is scheduled to convene for the last time in 2023 on 21 December.