The bank decided to hold interest rates steady at the committee’s most recent two meetings on July 18 and May 23, saying economic growth remained sluggish but inflation was on a downward trend.
On March 6, the bank raised interest rates by 600 basis points as part of an expanded $8 billion loan agreement with the International Monetary Fund, bringing the total increases since the beginning of the year to 800 basis points.
The median forecast in a poll of 15 analysts was for the central bank to keep its deposit rate unchanged at 27.25 percent and its lending rate at 28.25 percent at its next Monetary Policy Committee meeting. Only one analyst expected the central bank to cut rates by 100 basis points.
“We expect the Central Bank of Egypt to keep interest rates on hold as inflation remains well above target,” said James Swanston of Capital Economics.
“However, the momentum is in the right direction and with headline inflation expected to fall sharply in early 2025, attention will turn to the timing of the first rate cut – for us, we have set it for the first quarter of 2025,” he added.
Inflation fell to 25.7 percent in July, the first time the real interest rate has been higher than the inflation rate since January 2022. Inflation fell from a record high of 38 percent in September to 27.5 percent in June.
The Monetary Policy Committee says it is targeting an inflation rate of less than 9 percent by the end of 2024.
As part of the agreement with the International Monetary Fund in March, Egypt allowed the exchange rate to float to less than 50 pounds to the dollar after fixing it at 30.85 for a year.
The pound has since risen to around 48.6 to the dollar.
#Reuters #expects #Central #Bank #Egypt #interest #rates #unchanged