Cairo, Egypt – The Monetary Policy Committee (MPC) of the Central Bank of Egypt (CBE) has kept the current key interest rates unchanged in its final meeting of 2023.
The decision leaves the overnight deposit rate at 19.25 percent, the overnight lending rate at 20.25 percent, the main operation rate at 19.75 percent, and the discount rate also at 19.75 percent. This marks the third consecutive time the MPC has opted to keep the interest rates steady.
The MPC noted a decline in key international commodity prices, especially energy, which has eased global inflation pressures. This is coupled with the lowering of inflation forecasts for emerging market economies.
There has been a tightening of monetary policies in both advanced and emerging markets, which has helped alleviate inflationary pressures worldwide. This led to downward revisions in inflation forecasts compared to earlier assessments.
Increasing regional geopolitical tensions, particularly affecting energy prices, have introduced an element of uncertainty that could impact the inflation outlook.
Egypt’s real GDP growth has slowed down, recording a rate of 2.9 percent in the second quarter of 2023, a decrease from 3.9 percent in the previous quarter. This is attributed to a contraction in gross domestic investments, while net exports and consumption have been the main drivers of economic activity. The unemployment rate in Egypt remained relatively stable at 7.1 percent in the third quarter of 2023.
The annual headline inflation reversed its upward trend, recording 34.6 percent in November 2023, down from 35.8 percent in October 2023. Similarly, annual core inflation continued to decelerate, marking 35.9 percent in November 2023, a decrease from 38.1 percent in October 2023.
The MPC’s decision reflects a careful consideration of the current economic indicators and trends, along with an assessment of the cumulative impact of past tightening measures.
The committee emphasized that future policy rates would be determined based on forecasted inflation, taking into account the risks surrounding the inflation outlook.
The approach indicates a strategic and data-driven response to the dynamic economic environment.