Egypt’s central bank is expected to keep interest rates unchanged at its monetary policy meeting on Thursday, as inflation continues to fall, according to a Reuters poll.
During the last two meetings of the Monetary Policy Committee on July 18 and May 23, the central bank decided to hold interest rates steady, citing slowing economic growth and low inflation.
Earlier this year, the bank raised interest rates by 600 basis points, as part of an $8 billion agreement with the International Monetary Fund, bringing the total increases since the start of the year to 800 basis points.
A Reuters poll of 15 analysts expected the central bank to keep its deposit rate at 27.25% and its lending rate at 28.25%. However, only one analyst expected the central bank to cut rates by 100 basis points.
“We expect the MPC to keep rates on hold as inflation remains well above target,” James Swanston of Capital Economics told Reuters. With headline inflation expected to fall further in early 2025, all eyes will turn to the timing of the first potential rate cut, which is expected to occur in the first quarter of 2025, he added.
Inflation fell to 25.7% in July, the first time the real interest rate has been positive since January 2022. Inflation had fallen from 38% in September to 27.5% in June.
The Monetary Policy Committee also indicated that it aims to bring inflation to less than 9% by the end of 2024.
In another context, Egypt allowed the local currency to decline to less than 50 pounds to the dollar as part of its agreement with the International Monetary Fund in March, after it had been fixed at 30.85 pounds for a year. Since then, the value of the Egyptian pound has declined to about 48.6 pounds to the dollar.
