Egypt’s CBE expects inflation to moderate in ’24, significantly fall in H1-25

The Central Bank of Egypt (CBE) gave bullish forecasts about the country’s inflation rates following its monetary policy committee’s decision to keep key interest rates unchanged on Thursday.

The CBE’s MPC report said inflation is expected to moderate in 2024, with inflationary pressures starting to subside. It also forecast a significant decline in inflation in the first half of 2025 due to “the combined impact of recent monetary policy tightening, unification of the foreign exchange market, and favourable base effects.”

Moreover, the report attributed its bullish forecast to the “sizable foreign direct investment inflows, substantial improvement in external financing conditions, and their subsequent impact on foreign reserve accumulation, as well as increasing domestic and foreign demand for Egyptian pound denominated assets will contribute significantly to price stability.”

“Consequently, recent exchange rate dynamics are supporting the tightening of monetary conditions, which will anchor inflation expectations, and dampen the inflation outlook going forward.” the statement added.

Annual inflation, which peaked at 38 percent in September, slowed to 32.5 per cent in April, due to increased availability of foreign exchange and efforts to limit the cost of essential items.