The Monetary Policy Committee of the Central Bank of Egypt has decided to keep the overnight deposit and lending rates (interest rates) at 27.25 percent and 28.25 percent, respectively, for the fourth consecutive meeting. The central bank’s main operation rate remains at 27.75 percent, and the discount rate is also held steady at 27.75 percent.
In its statement, the committee explained that this decision reflects the latest developments and expectations on both global and local fronts since their previous meeting.
During the first quarter of 2024, the committee raised the central bank’s key interest rates by 800 basis points.
The committee believes it is appropriate to maintain the current interest rates until inflation decreases significantly and sustainably. They plan to continue using a data-driven approach to assess the optimal level and duration of monetary tightening, taking into account inflation expectations, monthly inflation trends, and the effectiveness of monetary policy transmission.
Commitment to inflation control
The committee is committed to using all available monetary policy tools to support the downward trend of inflation and achieve medium-term price stability.
According to the Central Bank’s statement, real GDP grew by 2.4 percent in the second quarter of 2024, up from about 2.2 percent in the first quarter. This indicates a slowdown in growth for the fiscal year 2023/2024, which is projected at 2.4 percent, compared to approximately 3.8 percent in the previous fiscal year.
The slight rise in the second quarter of 2024 is linked to increased contributions from the non-petroleum manufacturing sector, construction, and trade.
Read more: Egypt’s inflation reaches 26.4 percent in September driven by fuel, electricity hikes
Outlook for economic activity
The statement further noted that preliminary indicators for the third quarter of 2024 point to a gradual recovery in real economic activity, with expectations for it to reach full capacity by fiscal year 2025/2026. Current estimates suggest that real GDP is still below its full capacity, supporting the anticipated decline in inflation in the near future.
Data shows that annual inflation rates, both general and core, stabilized around 26.4 percent and 25.0 percent, respectively, in September 2024.
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