Breaking News: Central Bank of Egypt to Keep Interest Rates Unchanged Amid Decreasing Inflation - Analysts Predict
In a recent poll of analysts, it has been forecasted that the Central Bank of Egypt (CBE) will maintain its overnight interest rates at the upcoming monetary policy committee meeting. This decision comes as inflation continues to decline, prompting the CBE to keep rates steady at its last two meetings.
Back in March, the CBE raised rates by 600 basis points as part of an agreement with the International Monetary Fund, totaling an increase of 800 bps since the beginning of the year. Despite this, the median forecast among analysts suggests that the CBE will hold its deposit rate at 27.25% and lending rate at 28.25%, with only one analyst predicting a possible 100 bps rate cut.
"We anticipate interest rates being left on hold by the CBE given inflation remains well above target," said James Swanston of Capital Economics. However, with inflation dropping to 25.7% in July and the real interest rate turning positive for the first time since January 2022, attention will soon shift towards the timing of the first rate cut, potentially in Q1 2025.
The monetary policy committee has set a target of inflation below 9% by the end of 2024, as Egypt allowed its currency to depreciate to under 50 to the dollar in March, as part of its agreement with the IMF. The Egyptian pound has since strengthened to around 48.6 to the dollar.
In conclusion, the CBE's decision on interest rates can have a significant impact on the financial landscape in Egypt. For investors, this stability can provide a sense of security, while borrowers may benefit from potentially lower rates in the future. It's essential to keep a close eye on these developments and consider how they may affect your financial decisions moving forward.