Egypt’s apex bank keeps interest rates unchanged

Highlights

• Egypt kept interest rates unchanged amid signs of softening inflationary pressures, likely refraining from further monetary tightening until it manages a much-awaited currency devaluation.
• The Monetary Policy Committee maintained the deposit rate at 19.25% and the lending rate at 20.25%. Eight out of 13 economists in a Bloomberg survey correctly predicted the decision.
• Meanwhile, some analysts had believed the central bank might consider raising rates to help tame inflation, which was higher than forecast in August.

Source:Bloomberg

Our Takeaway

Egypt, like much of the rest of Africa and the world at large, is grappling with inflationary pressure even as the government tries to steer its economy out of a crisis triggered by the global economic shock caused by the Russian invasion of Ukraine. The Egyptian pound has lost at least 50% of its value against the dollar in a series of steep devaluations since March 2022. While the Central Bank has kept interest rates high, experts believe it still needs to do more in terms of rate hikes and devaluation.