Egypt Keeps Interest Rate at 19.25%

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Egypt Keeps Interest Rate at 19.25%
Egypt

Egypt Keeps Interest Rate at 19.25%

The Central Bank of Egypt left its key overnight deposit rate unchanged at 19.25%, leaving the key rate at 1992 level highs in its September 2023 meeting. The monetary policy committee decision came as the country’s headline inflation rate slowed while economic growth eased – in line with analyst expectations.

The committee said it was targeting average inflation of 5% to 9% by 2024. The policy committee said that it will continue assessing the cumulative impact of previously enacted tightening policies and their transmission to the economy in a data-driven manner.

The MPC reiterates that the path of future policy rates remains a function of forecasted inflation rather than prevailing inflation rates and will continue to monitor all incoming developments underlying the economic outlook.

The country’s gross domestic product grew by 3.9% in the January-March quarter, bringing GDP for the first nine months of fiscal 2022/23 to 4.1%. The fiscal year ends on June 30.

“Leading indicators for 2023 Q2 point towards a moderation of real GDP growth,” the MPC said.

“Real GDP growth is expected to slow down in fiscal year 2022/23 compared to the previous fiscal year, before picking up gradually over the medium term.”

The committee said it will not hesitate to utilize all its available tools to ensure that the policy stance is set at sufficiently restrictive levels with the aim of attaining the CBE’s upcoming inflation targets of 7 per cent (± 2 percentage points) on average by 2024 Q4.

Annual urban consumer price inflation rate surged to a record 37.4% in August from 36.5% in July, also a record, the statistics agency CAPMAS said last week. But core inflation, which cuts out volatile items, fell to 40.4% in August from 40.7% in July and a record 41.0% in June.

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