Egypt's Central Bank Maintains Interest Rates Unchanged

The Monetary Policy Committee (MPC) of the Central Bank of Egypt (CBE) has maintained interest rates unchanged in its final meeting of FY2022/2023 which ends on 30 June.

The MPC maintained the overnight deposit rate, overnight lending rate and the rate of the main operation unchanged at 18.25 percent, 19.25 percent and 18.75 percent, respectively.

The discount rate was also kept unchanged at 18.75 percent.

The CBE attributed the decision to recent readings on inflation and real GDP growth.

“Domestically, growth of real economic activity moderated to 3.9 percent in Q4 2022 compared to 4.4 percent in Q3 2022, indicating that growth during the first half of the fiscal year 2022/23 registered 4.2 percent. Detailed figures for Q4 2022 show growth was mainly driven by the positive contribution of net exports, in line with exchange rate developments,” the CBE explained.

Additionally, the real GDP growth continues to be driven by private sector economic activity, supported by the positive contributions of trade, agriculture and construction, according to the CBE.

That said, the CBE projected real GDP growth to finish lower in the current FY2022/2023 compared to the previous fiscal year, before recovering going forward.

The CBE also said that the unemployment rate slightly declined to 7.1 percent in the first quarter of 2023, down from 7.2 percent in the previous quarter.

Amid rising inflation

The CBE decision to maintain interest rates comes despite the rise in the inflation rate readings seen in May.

Egypt’s annual headline inflation rose in May, hitting 33.7 percent up from 31.5 percent in April, resuming an upward trend that started in mid-2022, according to a report released by the Central Agency for Public Mobilisation and Statistics (CAPMAS) earlier in June.

Meanwhile, the country’s annual core inflation reached 40.3 percent in May, up from 38.6 percent in April, reaching its highest levels since 2011.