URGENT: Egypt c.bank keeps interest rates steady buoyed by disinflation faith

The Central Bank of Egypt (CBE), as widely expected, has left its key interest rates unchanged on Thursday as inflation had decelerated over two months.

In its periodic meeting, the CBE’s Monetary Policy Committee (MPC) decided to keep the CBE’s overnight deposit rate, overnight lending rate, and the rate of the main operation unchanged at 27.25 percent, 28.25 percent, and 27.75 percent, respectively. The Committee also kept the discount rate unchanged at 27.75 percent. The decision reflects recent developments and outlook at the global and domestic levels since the previous meeting, the MPC said in a statement.

“Inflationary pressures continued to ease since annual headline and core inflation already peaked at 38.0 percent in September 2023 and 41.0 percent in June 2023, respectively. This decelerating trend was sustained despite the unexpected surge in February 2024, as annual headline and core inflation declined to 32.5 percent and 31.8 percent in April 2024, respectively.” the statement read.

“Favourable base effects from the strong inflationary episodes in 2023 played a role in bringing inflation rates down in 2024. Annual headline inflation rates have been driven by food items since December 2022, although the steady unwinding of annual food inflation has been offset by rising non-food inflation since November 2023.”

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.

“… the Committee judges that the current monetary stance remains appropriate to place inflation on a declining trend, and will continue to assess its transmission to the economy in a data-driven manner.” the MPC statement concluded.