CBE keeps key interest rates during Monetary Policy Committee meeting

Cairo – July 18, 2024: In its latest meeting, the Central Bank of Egypt’s Monetary Policy Committee agreed to maintain current key interest rates, noting “the current monetary stance is appropriate to support the sustained moderation of inflation”.

The overnight deposit rate remained at 27.25 percent, the overnight lending rate at 28.25 percent, and the rate of the main operation at 27.75 percent. The discount rate was held steady at 27.75 percent.

Egypt's real GDP growth had slowed to 2.2 percent in Q1 2024, down from 2.3 percent in the previous quarter, according to the official release from the CBE. The decline reflected the impact on the services sector from ongoing geopolitical tensions and disruptions in maritime trade, it noted.

Leading indicators for the second quarter suggested continued economic lethargy, projecting a slowdown in GDP growth for FY2023/2024, recovering in the following fiscal year.

Meanwhile, the unemployment rate had improved marginally to 6.7 percent in Q1 2024 from 6.9 percent in Q4 2023.

Inflationary pressures in Egypt had shown signs of easing, with both headline and core inflation rates decreasing for the fourth consecutive month, the CBE highlighted.

In June, annual headline inflation stood at 27.5 percent, while core inflation was at 26.6 percent, with food inflation had dropping significantly to 31.9 percent in June from a peak of 73.6 percent in September 2023, indicating improved market dynamics.

Globally, the MPC noted a positive but moderated economic growth outlook, influenced by ongoing monetary policy tightening in advanced and emerging market economies.

This tightening had contributed to a decline in global inflation rates, prompting some central banks to adjust rates downwards recently, it explained, emphasizing that due to uncertainties over inflation trends and persistent risks, major central banks are expected to maintain a cautious stance on monetary policy.

Prices of key commodities like energy had decreased recently due to reduced global demand, geopolitical tensions continued to pose potential threats to commodity supply stability, it added.

According to an International Monetary Fund (IMF) released on Tuesday, global inflation was anticipated to ease to 5.9 percent in 2024, down from 6.7 percent in 2023, despite developing inflationary pressures and geopolitical tensions.

The IMF's report also revised Egypt's growth projections, expecting growth of 2.7 percent in FY2024/2025 and a slightly improved 4.1 percent in FY2025/2026, a downgrade from earlier projections of 3 percent and 4.4 percent, respectively. Globally, growth projections remained stable at 3.2 percent for 2024 and 3.3 percent for 2025.