Egypt’s central bank keeps interest rates steady

A general view of the new headquarters of the Ministry of Finance in the New Administrative Capital (NAC) east of Cairo, Egypt. (Reuters)

• MPC said international commodity prices were likely to continue declining

CAIRO: The Central Bank of Egypt (CBE) kept its key overnight interest rates unchanged on Thursday, saying commodity prices appear to be falling and economic growth is likely to recover in the fiscal year that begins next week.
As expected, the bank’s Monetary Policy Committee (MPC) left the lending rate steady at 19.25 percent and the deposit rate at 18.25 percent. Not one of 17 analysts polled by Reuters on Monday had forecast a change.
“Leading indicators for 2023 Q1 point toward a slowdown of real GDP growth,” the MPC statement said. “Real GDP growth is expected to slow down in fiscal year 2022/23 compared to the previous fiscal year, before recovering thereafter.”
The MPC said international commodity prices were likely to continue declining.
Headline inflation surged to an annual 32.7 percent in May, just short of an record high, from 30.6 percent in April. Month-on-month, inflation jumped to 2.7 percent from 1.7 percent in April.
Economic growth meanwhile eased to 3.9 percent in the fourth quarter of 2022 from 4.4 percent in the third quarter, the MPC said.
“Leading indicators for 2023 Q1 point toward a slowdown of real GDP growth.”
Expectations of a rate increase were dampened after President Abdel-Fattah El-Sisi last week appeared to rule out any imminent devaluation of the currency, even though the pound has been trading at about 38 to the dollar on the black market compared with the official rate of 30.9 pounds.
Since Russia invaded Ukraine in February last year, causing investors to withdraw billions of dollars from the Egyptian treasury market, the central bank has raised rates by a cumulative 1,000 basis points and allowed the currency to fall by half.