Economy

Egypt Central Bank Expected to Maintain Steady Interest Rates: Reuters Poll

CAIRO (Reuters) – The Central Bank of Egypt (CBE) is expected to maintain its overnight interest rates when its monetary policy committee convenes on Thursday, as inflation continues to decrease, according to a survey of analysts.

The CBE has kept rates steady during its last two meetings, held on July 18 and May 23, citing slow economic growth paired with a decline in inflation.

On March 6, the bank raised rates by 600 basis points as part of an $8 billion agreement with the International Monetary Fund, bringing total increases for the year to 800 basis points.

The median forecast from a group of 15 analysts indicates the central bank will keep its deposit rate at 27.25% and its lending rate at 28.25% during the upcoming meeting. Only one analyst anticipated a reduction of 100 basis points.

“We anticipate the CBE will hold interest rates steady, given that inflation remains significantly above the target,” stated James Swanston of Capital Economics. “However, the trend is moving in the right direction, and with a more pronounced decline expected in the headline rate by early 2025, attention will shift to when the first rate cut will occur – we currently expect it in the first quarter of 2025.”

Inflation dropped to 25.7% in July, marking the first instance since January 2022 where the real interest rate has been positive. This figure fell from a peak of 38% in September, improving from 27.5% in June.

The monetary policy committee has set a target to bring inflation below 9% by the end of 2024.

As part of its agreement with the IMF in March, Egypt allowed its currency to depreciate against the dollar, which had been fixed at 30.85 for a year, dropping to under 50. The Egyptian pound has since regrown its value, currently trading around 48.6 to the dollar.

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