The Monetary Policy Committee (MPC) of the Central Bank of Egypt (CBE) announced on Thursday that it has decided to maintain interest rates for the fourth time in 2024.
In a statement, the CBE confirmed that the overnight deposit rate, overnight lending rate, and the main operation rate will remain unchanged at 27.25%, 28.25%, and 27.75%, respectively. The credit and discount rate was also held steady at 27.75%.
The CBE explained that the decision reflects both global and domestic economic developments and forecasts since the committee’s last meeting.
The statement highlighted that globally, tighter monetary policies across advanced and emerging markets have helped bring down inflation. Several central banks have begun lowering interest rates as inflation nears target levels. Although global economic growth remains relatively stable, the outlook faces downside risks due to the impact of restrictive monetary policies on economic activity.
Additionally, the CBE noted upward inflation risks stemming from fluctuations in global commodity prices, especially energy, driven by supply chain disruptions, geopolitical tensions, and adverse weather conditions.
Domestically, Egypt's real GDP grew by 2.4% in the second quarter of 2024, compared to 2.2% in the first quarter of the year. However, this reflects a slowdown in the overall growth rate, with Egypt’s economy expanding by only 2.4% in the 2023/24 fiscal year, compared to 3.8% in 2022/23.
The slight improvement in Q2 2024 was attributed to increased contributions from non-oil manufacturing, construction, and trade sectors to GDP growth. Early indicators suggest that the real economy continues to recover gradually in the third quarter of 2024, with expectations that it will reach full potential by the 2025/26 fiscal year.
The CBE noted that GDP growth remains below its full capacity, supporting forecasts of a gradual decline in inflation in the coming period.
The CBE reported that the annual headline inflation rate stood at 26.4% in September 2024, with core inflation at 25.0%. This stability reflects the impact of tighter monetary policies domestically and globally.
The CBE emphasized that it will continue to monitor both domestic and international developments closely to ensure economic stability while supporting growth and managing inflation expectations.