Egyptian central bank keeps interest rates unchanged

Egyptian central bank keeps interest rates unchanged
Egyptian central bank keeps interest rates unchanged

Egypt’s central bank kept its overnight interest rates unchanged on Thursday, as expected, saying that while economic growth had slowed, rising non-food inflation had offset the steady decline in food inflation.

The meeting of the central bank’s Monetary Policy Committee (MPC) was the first since Egypt signed an $8 billion financial support deal with the International Monetary Fund (IMF) in March, when it increased its rates of 600 basis points (bp).

The CPM on Thursday left the lending rate unchanged at 28.25% and the deposit rate at 27.25%, the central bank said in a statement.

The hold was widely expected, with only one of 19 analysts polled by Reuters forecasting the monetary policy committee would cut rates.

Interest rates are still well below the overall inflation rate, which stood at 32.5% in April. Inflation has declined from a record 38% in September.

“Forecasts indicate that inflation has already peaked and is therefore expected to moderate in 2024 when inflationary pressures begin to ease,” the Monetary Policy Committee said in a statement accompanying the rate decision. of interest.

The Monetary Policy Committee said economic growth slowed to 2.3% in the fourth quarter of 2023, from 4.2% a year earlier, and that indicators suggested growth would remain weak in the first quarter of 2024.

The central bank raised interest rates on March 6 as part of its agreement with the IMF, bringing the total increases since the start of the year to 800 basis points.

As part of the deal with the IMF, Egypt let its currency fall below 50 to the dollar after pegging it at 30.85 for a year. The Egyptian pound has since strengthened to around 47.1 per dollar.

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