Cairo – Mubasher: The Monetary Policy Committee (MPC) of the Central Bank of Egypt (CBE) decided on 21 December 2023 to maintain the rates of overnight deposit and lending at 19.25% and 20.25%, respectively.
The CBE also kept the main operation rate unchanged at 19.75% and the discount rate at 19.75%, signalling the last MPC meeting of 2023, according to official data.
Egypt’s financial regulator noted that “the current policy rates remain appropriate at this juncture,” adding that the MPC “will continue assessing the cumulative impact of previously enacted tightening policies and its transmission to the economy in a data-driven manner.”
Future policy rates, however, would be determined based on forecast inflation rather than prevailing inflation rates.
As for the coming decisions, “The committee will not hesitate to utilise all its available tools to ensure that the policy stance is set at sufficiently restrictive levels to preserve the decelerating trend of underlying inflation.”
However, tight monetary stance is set to steer the future path of annual inflation rates towards the CBE’s next target levels while safeguarding price stability in the medium term.
The MPC elaborated on the unchanged rates decision by saying that global economic growth has eased, with its outlook revised downwards when compared with the committee’s previous meeting, given the ongoing effect of policy rate hikes by major central banks on demand.
In addition, the basic international commodity prices, mainly energy, shrank when compared to the previous meeting, mainly because of reduced speculation over oil supply shortages and dampening global demand.
The MPC added: “The continued impact of monetary policy tightening cycles in advanced and emerging market economies has eased inflationary pressures worldwide, and forecasts for inflation in these economies have been revised downwards compared to the previous meeting. However, increasing geopolitical tensions in the region have raised uncertainty surrounding the inflation outlook, particularly concerning energy prices.”
Domestically, Egypt’s annual headline inflation reversed its upward trend and decelerated in both October and November 2023. According to the Central Agency for Public Mobilization and Statistics (CAPMAS), the country’s consumer price index (CPI) hit 191.8 points in November 2023.
As for the CBE calculations, the inflation rate in Egypt recorded 34.6% in November, down from 35.8% in October 2023.
As for the annual core inflation, “[It] continued to decelerate for the fifth consecutive month, recording 35.9% in November 2023, down from 38.1% in October 2023. Monthly headline dynamics came broadly as expected, reflecting seasonal decline in prices of agricultural products, as well as, higher regulated prices in November 2023.”
