The Clap:
The Central Bank of Egypt (CBE) maintained key interests at its Monetary Policy Committee (MPC) meeting on Thursday.
The details:
The bank left overnight lending rates unchanged at 28.25%, held overnight deposit rates steady at 27.25%, and main operation and disc rate were maintained at 27.75%.
The rationale:
The CBE notes that while economic growth slowed to 2.5% in the first half of the fiscal year from 4.2% in the same period last year, rising non-food inflation had mitigated a steady decline in food inflation.
Remember:
Annual headline and core inflation fell to 32.5% and 31.8% respectively last month, falling from annual headline and core inflation peaks of 38% and 41% in September and June 2023, respectively.
What to expect going forward:
The CBE’s average inflation target is 7% (±2%) by 4Q 2024 and 5% (±2%) in 4Q 2026. The MPC forecasts “a significant decline in inflation” in 1H 2025 due to the combined impact of recent monetary policy tightening, unification of the foreign exchange market, and favorable base effects.
