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Central Bank of Egypt Delivers Jumbo Rate Hike
The central bank of Egypt raised interest rates by 600bps during an unscheduled meeting on March 6th 2024, pushing the key overnight deposit rate to a record high of 27.25% and the overnight lending rate to 28.25%, also an all-time high. The decision, which follows a 200bps hike back in February, aims to accelerate the monetary tightening process in order to fast-track the disinflation path and ensure a decline in underlying inflation. The central bank also noted that the latest tightening brings the monetary stance to a sufficiently restrictive level, to anchor inflation expectations, and will be maintained for as long as necessary to achieve the desired disinflation course. Inflation in Egypt remains elevated at 29.8% and the central bank expects it to remain well above the 7% target this year. Also, the Egyptian economy has been recently hit by foreign exchange shortages resulting in the existence of a parallel exchange rate market and constraining economic growth.
Published on 2024-03-06

Egypt Unexpectedly Raises Key Rate by 200 bps
The Central Bank of Egypt raised its key overnight deposit rate by 200 bps to a 32-year high of 21.25% and its lending rate at 22.25% in its January meeting. The decision came as annual headline and core inflation decelerated to 33.7% and 34.2% in December 2023, respectively, but recent developments indicate higher than expected monthly dynamics and sustained inflationary pressures. The committee will continue to assess risks surrounding the inflation outlook and use available tools to maintain a tight policy stance. The path of future policy rates will depend on forecasted inflation with the aim of achieving price stability over the medium term. Meanwhile, the Egyptian pound continued to devalue while the revival of the accord depended on discussions about how much and how fast Egypt might devalue its currency. The rate hike shows Egypt’s intention to comply with the IMF in order to facilitate an agreement.
Published on 2024-02-01

Egypt Holds Rates Unchanged
The Central Bank of Egypt left its key overnight deposit rate unchanged at the 29-year high of 19.25% and its lending rate at 20.25% in its December meeting. The hold came as inflation showed some signs of slowing since hitting a record-high of 38% in September, with November’s print dropping to 34.6%. The result was broadly in line with expectations, although markets show broad consensus that the central bank is likely to hike both rates in future meetings. The tightening is expected as political campaigning by the incumbent President Abel-Fattah El-Sisi has terminated following his reelection this month, anticipating a largely expected devaluation in the Egyptian pound. Such development would mark the fourth devaluation since early 2022 as official dollar exchange rates widen sharply from the accessible currency in the black market. The imminent devaluation is likely to follow up on fresh monetary tightening by the central bank as the government aims to expand its loan from the IMF.
Published on 2023-12-21

Central Bank of Egypt Holds Rate Unchanged
The Central Bank of Egypt left its key overnight deposit rate unchanged at the 29-year high of 19.25% and its lending rate at 20.25% in its November 2023 meeting, in line with market expectations. The hold came despite elevated levels of inflation in the Egyptian economy, which has remained above the 30% threshold for most of the year before reaching a record of 38% in September. To counter inflation, markets expect the Central Bank of Egypt to eventually mandate a fresh round of tightening along with another devaluation of the Egyptian pound, in line with the IMF’s urge for a more flexible currency policy that comes in hand with its $3 billion rescue package. Still, analysts deem it unlikely that the central bank would pass such developments, likely resulting in a price shock, before the country’s presidential election in December.
Published on 2023-11-02

Egypt Keeps Key Rate Steady at 19.25%
The Central Bank of Egypt left its key overnight deposit rate unchanged at 19.25%, leaving the key rate at 1992 level highs in its September 2023 meeting. The decision was made in line with analyst estimates as incoming data since the previous meeting, including inflation came in line expectations. The MPC stated that it will continue assessing the cumulative impact of previously enacted tightening policies and its transmission to the economy in a data-driven manner. The MPC reiterates that the path of future policy rates remains a function of forecasted inflation rather than prevailing inflation rates and will continue to monitor all incoming developments underlying the economic outlook. The committee will not hesitate to utilize all its available tools to ensure that the policy stance is set at sufficiently restrictive levels with the aim of attaining the CBE's upcoming inflation targets of 7 percent (± 2 percentage points) on average by 2024 Q4.
Published on 2023-09-21

Egypt Unexpectedly Raises Key Rate by 100 bps
The Central Bank of Egypt raised its key overnight deposit rate by 100 bps to 19.25%, pushing the key rate to 1992 levels high in its August 2023 meeting, in a surprise move as market expected no change. The decision was made to curb inflationary pressures and anchor inflation expectations and the MPC reiterates that the future path of policy rates will depend on the function of forecasted inflation rather than prevailing inflation rates. The annual inflation rates continued to be affected by persistent supply shocks, increasing to record 35.7% in June 2023 from 32.7% in May 2023. The committee will continue to monitor all incoming developments underlying the economic outlook and will not hesitate to utilize all its available tools to ensure that the policy stance is set at sufficiently restrictive levels to bring the CBE's upcoming inflation targets of 7 percent (± 2 percentage points) on average by 2024 Q4.
Published on 2023-08-03

Egypt Leaves Key Rate Unchanged
The Central Bank of Egypt maintained its key overnight deposit rate steady at an over five year-high of 18.25% on June 22nd 2023, as expected. The MPC reiterates that the path of future policy rates remains a function of forecasted inflation rather than prevailing inflation rates. The MPC will continue to monitor the incoming developments underlying the economic outlook. Policymakers noted that annual headline and core inflation rose to 32.7% and 40.3% in May 2023, respectively, driven by higher food prices and supported by higher non-food prices; impacted by recent government measures and seasonal demand on select core food items. Domestically, growth of real economic activity eased to 3.9% in Q4 2022 from 4.4% in Q3 2022, implying that growth during the first half of the fiscal year 2022/23 registered 4.2 percent. Going forward, real GDP growth is expected to slow down in fiscal year 2022/23 compared to the previous fiscal year, before recovering thereafter.
Published on 2023-06-22

Egypt Holds Key Rate Steady at Over 5-Year High of 18.25%
The Central Bank of Egypt kept its key overnight deposit rate steady at an over five year-high of 18.25% on May 18th 2023, as expected, after raising it by 200 bps in March. The Committee said it continues to assess the impact of the cumulative policy rate hikes of 1000 bps since March 2022 in addition to the 400 bps increase in the required reserve ratio in September 2022, to contain inflationary pressures. Policymakers noted that headline inflation eased for the first time in 10 months in April, to 30.6%, after several rises that culminated in a nearly 6-year peak of 32.7% in March. Regarding activity, the Bank reported that the economy posted a 3.9% year-on-year expansion in Q4 of the 2022 calendar year, slightly below Q3’s 4.4% growth, indicating that growth during the first half of fiscal year 2022/23 registered 4.2%. Going forward, real GDP growth is expected to slow down in the fiscal year 2022/23 compared to the previous fiscal year, before recovering thereafter.
Published on 2023-05-18

Egypt Raises Key Rate by 200bps
The Central Bank of Egypt raised its key overnight deposit rate by 200bps to 18.25% in its March 2023 meeting, in line with market estimates, and adding to the 10 percentage points in interest rate hikes since the start of the bank’s tightening cycle in March 2022. The Monetary Policy Committee stressed that higher borrowing costs are necessary to tame high inflation forecasts, despite moderating real economic activity. Headline inflation rose to a record-high 31.9% in February, while the core reading rose to a record high of 40.3%. Meanwhile, the CBE maintained the current inflation targets of 7% by the fourth quarter of 2024 and 5% by the fourth quarter of 2026, which were set in December. The move also aims to alleviate pressure on the Egyptian pound amid the country’s currency crisis, as the spread between the black market and official rates continues to widen due to the speculation of a fourth currency devaluation since last March.
Published on 2023-03-30

Egypt Unexpectedly Holds Rates Unchanged
The Central Bank of Egypt held its key overnight deposit rate unchanged at 16.25% in its February 2023 meeting, surprising market expectations of a 100bps increase after the 800bps in interest rate hikes since the start of the bank’s tightening cycle in March 2022. The meeting followed a larger-than-expected 300bps hike in December and announced a new inflation target of 5%-9% by the fourth quarter of 2024. The move extended pressure on the Egyptian pound, which sank to a record-low of 30.2 per USD after the central bank mandated a more flexible exchange rate regime earlier in the month to meet terms of a USD 3 billion IMF support package.
Published on 2023-02-02

Egypt Hikes Interest Rate by More than Expected
The Central Bank of Egypt raised its key overnight deposit rate by 300bps to 16.25% in its December 2022 meeting, well above market expectations of a 100bps rate increase and adding to the 800bps in interest rate increases since the start of the bank’s tightening cycle in March. The central bank noted that major monetary authorities expect inflation to ease next year and that commodity prices have dropped more than their previous forecasts believed. Still, policymakers underscored that many upside risks on global commodity price levels persist and that growth in the Egyptian economy has already pointed to a solid recovery, paving the need for tighter monetary policy. In accordance, the CBE set its inflation target to reach the 5%-9% range by the fourth quarter of 2022. According to the latest data, inflation in Egypt stands at a five-year high of 18.7%. In the meantime, the central bank also raised its overnight lending rate by 300bps to 17.25%.
Published on 2022-12-22

Egypt Raises Key Rate to 13.25%
The Central Bank of Egypt lifted its key overnight deposit rate by 200 bps to 13.25% during an exceptional meeting on October 27th, 2022, in order to anchor inflation expectations and, thus, ensure price stability over the medium term. Policymakers said that elevated global and domestic prices are expected to keep headline inflation above the preannounced target of 7% (±2 percentage points) on average in 2022 Q4. The annual urban inflation rate in Egypt accelerated to a near four-year high of 15% in September from 14.6% in August, above market expectations of 14.7%. Meanwhile, the bank said it was moving to a more flexible currency regime as the country gets closer to an agreement with the International Monetary Fund for a new loan. The central bank set the overnight lending rate at 14.25% and the overnight deposit rate at 13.25%. The discount rate was also raised by 200 basis points to 13.75%.
Published on 2022-10-27

Egypt Central Bank Keeps Interest Rates Steady
The Central Bank of Egypt kept its key overnight deposit rate steady at 11.25% in its September 22nd meeting, surprising analysts who expected policymakers to hike it by an entire percentage point. The move came despite annual headline inflation surging to 14.6 percent in August 2022, the highest since November 2018. The committee also noted that the economy remains resilient, driven mainly by the private sector. The central bank held the overnight deposit rate, overnight lending rate, and the rate of the main operation unchanged at 11.25 percent, 12.25 percent, and 11.75 percent. The CBE also decided to hike the required reserve ratio to 18 percent from 14 percent.
Published on 2022-09-22

Egypt Holds Key Interest Rate at 11.25%
The Central Bank of Egypt kept its key overnight deposit rate steady at 11.25% in its June 23rd meeting against market expectations of 11.75%, following two consecutive rate-hikes of 100 bps and 200 bps in March and May respectively. The monetary authority noted that it continues to assess the impact of previous two rate-hikes on inflation expectations and macroeconomic developments in the medium term. Further, it stressed that although achieving low and stable inflation rates in the medium term is a prerequisite for supporting the purchasing power of the Egyptian citizen and achieving high and sustainable growth rates; the current interest rates depend mainly on the expected inflation rates and not the prevailing rates, which runs at a 3-year high of 13.5%. Looking forward, policymakers expect inflation to deviate slightly from the bank's official target of 7+/-2% on average during Q4 of 2022, and then gradually decline again.
Published on 2022-06-23

Egypt Raises Interest Rate to 11.25%
The central bank of Egypt unexpectedly raised its key overnight deposit rate by 200bps to 11.25% in its May 19th meeting. It is the second increase in borrowing costs since March as the country aims to tackle soaring inflation and restore the allure of its local debt with foreign investors amid a global wave of monetary tightening. Consumer-price growth in the North African nation surged to 13.1% in April, the highest level in almost three years as food costs spiked due to the war in Ukraine. A major food importer, Egypt is racing to deal with record grain prices fueled by the conflict. The Monetary Policy Committee reiterated that the path of future policy rates remains a function of inflation expectations, rather than of prevailing inflation rates. The overnight lending rate was also increased to 12.25% from 10.25%.
Published on 2022-05-19

Egypt Raises Interest Rates in Exceptional Meeting
The central bank of Egypt unexpectedly raised its key overnight deposit rate by 100bps to 9.25% in an exceptional monetary policy committee meeting on March 21st 2022. It is the first increase in borrowing costs since 2017 amid strong inflationary pressures. The monetary policy committee had been scheduled to meet on March 24th. Policymakers noted that rising international commodity prices resulting from further supply chain disruptions in addition to increased risk-off sentiment have added to domestic inflationary pressures as well as external imbalances. The overnight lending rate was also increased to 10.25% from 9.25%.
Published on 2022-03-21

Egypt Leaves Key Interest Rate Steady at 8.25%
The Central Bank of Egypt left its key overnight deposit rate steady at 8.25% on February 3rd, 2022, as expected. The policymakers noted that the rate remains consistent with achieving the inflation target of 7 percent (±2 percentage points) on average in 2022 Q4 and price stability over the medium term. Policymakers noted that annual inflation increased to 5.9% in December from 5.6% in November, resuming its upward trend since May 2021, but remained within the central bank's target range of 5-9%. The committee said that leading indicators point towards a continued expansion across most economic sectors and that domestic economic activity over the near-term is expected to be mainly driven by domestic demand and, in specific, gross domestic investments.
Published on 2022-02-03

Egypt Intrest Rates Unchanged at 8.25%
The Central Bank of Egypt left its key overnight deposit rate steady at 8.25% on December 16th, 2021, as expected. The policymaker that the rate remains consistent with achieving the inflation target of 7 percent (±2 percentage points) on average in 2022 Q4 and price stability over the medium term. Meanwhile, it was mentioned that the inflation rate eased to 5.6 and 6.6 percent in October and November, respectively stemming from the transitory supply shock witnessed in tomato prices during November 2020. Also, GDP expanded 9.8 percent in Q3 accelerating from a 7.7 percent growth in Q2 reflecting the sustained pick-up of domestic economic activity, as well as the partial impact of a positive base effect. Meantime, the overnight lending rate was left at 9.25%, and the discount rate was at 8.75%.
Published on 2021-12-16

Egypt Keeps Rates Steady
The Central Bank of Egypt left its key overnight deposit rate steady at 8.25% on October 28th, 2021, as expected remains consistent with achieving the inflation target of 7 percent (±2 percentage points) on average in 2022 Q4 and price stability over the medium term. Annual headline urban inflation increased to 6.6% in September 2021 from 5.7% in August 2021, affected by unfavorable base effects during September 2021 as expected as well as strong monthly dynamics mainly related to higher tomato prices. Meantime, the overnight lending rate was also left at 9.25%, and the discount rate at 8.75%. The MPC concluded by saying it closely monitors all economic developments and will not hesitate to utilize all available tools to support the recovery of economic activity, within its price stability mandate.
Published on 2021-10-28

Egypt Leaves Key Rates Unchanged
The Central Bank of Egypt left its key overnight deposit rate steady at 8.25% on August 16th, 2021, as expected saying it remains consistent with achieving the inflation target of 7 percent (±2 percentage points) on average in 2022 Q4 and price stability over the medium term. Annual headline urban inflation increased to 5.7 percent in August 2021 from 5.4 percent in July 2021, after having accelerated from 4.9 percent in June 2021. Meantime, the overnight lending rate was also left at 9.25%, and the discount rate at 8.75%. The MPC concluded by saying it closely monitors all economic developments and will not hesitate to utilize all available tools to support the recovery of economic activity, within its price stability mandate.
Published on 2021-09-16