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In its September 2023 meeting, the Central Bank of Egypt opted to keep its key overnight deposit rate unchanged at 19.25%, maintaining the key rate at its highest level since 1992. This decision aligns with analysts’ expectations and comes as the country’s headline inflation rate showed signs of slowing while economic growth moderated.
The monetary policy committee outlined its objective of achieving an average inflation rate ranging from 5% to 9% by 2024. The committee emphasized its commitment to assessing the cumulative effects of previously implemented tightening measures and their impact on the economy, relying on data-driven analysis.
The MPC reiterated that future policy rate adjustments would be determined by projected inflation rather than prevailing inflation rates. The committee pledged to closely monitor all incoming developments that underpin the economic outlook.
Egypt’s gross domestic product (GDP) expanded by 3.9% in the first quarter of 2022, bringing the GDP growth for the first nine months of the fiscal year 2022/23 to 4.1%. The fiscal year concludes on June 30th. The MPC noted indications of a potential moderation in real GDP growth for the second quarter of 2023.
The committee anticipates a slowdown in real GDP growth for the fiscal year 2022/23 compared to the previous fiscal year, with a gradual pickup in growth over the medium term.
The MPC affirmed its readiness to utilize all available tools to maintain a sufficiently restrictive policy stance aimed at achieving the Central Bank of Egypt’s forthcoming inflation targets, with an average target of 7% (± 2 percentage points) by the fourth quarter of 2024.
While the annual urban consumer price inflation rate reached a record high of 37.4% in August, core inflation, which excludes volatile items, declined to 40.4% in August from 40.7% in July and a record 41.0% in June, as reported by the statistics agency CAPMAS last week.
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