CBE expected to maintain interest rates amid declining inflation

The median forecast from a survey of 15 analysts suggests the central bank will maintain its deposit rate at 27.25%

By: Business Today Egypt

Mon, Sep. 2, 2024

The Central Bank of Egypt (CBE) is anticipated to keep its overnight interest rates unchanged at its upcoming monetary policy committee meeting on Thursday, according to a Reuters poll of analysts.

The median forecast from a survey of 15 analysts suggests the central bank will maintain its deposit rate at 27.25% and its lending rate at 28.25%. Only one analyst predicted a 100 bps rate cut.

Following its previous two meetings on July 18 and May 23, where the CBE held rates steady, the bank has cited a slow economic growth but a continued decline in inflation as key factors in its decision.

In March, the CBE implemented a significant rate hike of 600 basis points (bps) as part of the $8 billion agreement with the International Monetary Fund (IMF), marking a total increase of 800 bps since the beginning of the year.

Inflation has decreased to 25.7% as of July, marking the first instance of a positive real interest rate since January 2022. This follows a decline from a peak of 38% in September to 27.5% in June.

The CBE has set a target to reduce inflation to below 9% by the end of 2024. Additionally, Egypt's currency, the pound, was allowed to depreciate to below 50 per dollar in March under its IMF agreement, following a fixed rate of 30.85 for the preceding year.