According to the Central Bank of Egypt (CBE), commodity prices look to be declining and economic growth is projected to rebound in the fiscal year that starts next week. As a result, the CBE kept its major overnight interest rates steady on Thursday.
The bank’s Monetary Policy Committee (MPC) maintained the loan rate at 19.25% and the deposit rate at 18.25%, as was to be expected.
“Leading indicators for 2023 Q1 point towards a slowdown of real GDP growth,” the MPC statement said. “Real GDP growth is expected to slow down in fiscal year 2022/23 compared to the previous fiscal year, before recovering thereafter.”
The MPC predicted that the decline in global commodity prices would likely continue.
From 30.6% in April, headline inflation jumped to an annual 32.7% in May, just missing a record high. Inflation increased month over month from 1.7% in April to 2.7%.
According to the MPC, economic growth slowed from 4.4% in the third quarter to 3.9% in the fourth quarter of 2022.
“Leading indicators for 2023 Q1 point towards a slowdown of real GDP growth.”
President Abdel-Fattah al-Sisi appeared to rule out any impending devaluation of the currency last week, dampening expectations of a rate increase. This is despite the fact that the black market rate of the pound has been around 38 to the dollar as opposed to the official rate of 30.9 pounds.
The central bank has increased interest rates by a total of 1,000 basis points while allowing the value of the pound to decrease by half since Russia’s invasion of Ukraine in February of last year. This caused investors to pull billions of dollars out of the Egyptian treasury market.
