CBE keeps interest rates unchanged for fifth meeting in row

The Central Bank of Egypt’s (CBE) Monetary Policy Committee (MPC) announced Thursday maintaining its key interest rates for the fifth time in a row.

The overnight deposit rate remains 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 also holds steady at 27.75 percent. 

This decision reflects the MPC’s evaluation of global and domestic economic conditions since its last meeting.

The MPC stated that the global factors include inflation which has eased as monetary tightening continues across advanced and emerging markets. While some central banks have started lowering rates, their policies remain restrictive to support disinflation toward targeted levels. 

“Global growth remains stable but faces challenges from the economic impact of monetary tightening, geopolitical tensions, and potential protectionist policies. Commodity prices, including energy, have generally moderated, though they remain vulnerable to supply disruptions and adverse weather events,” it added.

Domestically, the MPC noted that early indicators for Q3 2024 suggest stronger real GDP growth compared to the 2.4 percent recorded in Q2. 

It added that projections for Q4 show continued recovery, although output remains below potential, aiding the expected disinflation trend. Meanwhile, unemployment edged up to 6.7 percent in Q3 2024 from 6.5 percent in Q2, reflecting slower job creation relative to workforce growth.

Inflation figures were largely stable in October 2024. Annual headline inflation held at 26.5 percent, marking three consecutive months of stability, while core inflation eased to 24.4 percent from 25 percent in September. Food inflation also dropped to its lowest level in two years at 27.3 percent. These trends point to improved inflation expectations and a gradual normalization of monthly inflation rates, though risks from potential price adjustments remain.

According to the MPC, inflation is expected to hover near current levels through the end of 2024, with risks linked to geopolitical tensions, trade barriers, and fiscal policy impacts. A significant decline is anticipated starting Q1 2025, supported by the cumulative effects of monetary tightening and favorable base comparisons.

The MPC emphasized that its current policy stance is appropriate to contain inflation and will continue to rely on data-driven assessments to determine the future direction of monetary policy. 

The Committee reiterated its commitment to using all available tools to address inflationary pressures and closely monitor developments that may impact Egypt’s economic outlook.

This decision underscores the CBE’s focus on stabilizing inflation while fostering gradual economic recovery in an uncertain global environment.