Egypt central bank keeps interest rates steady as growth drops


A general view of the new headquarters of Central Bank of Egypt, at the New Administrative Capital (NAC) east of Cairo, Egypt December 8, 2023. REUTERS/Amr Abdallah Dalsh/File Photo Acquire Licensing Rights

Egypt’s central bank kept its overnight interest rates unchanged on Thursday as predicted, saying GDP growth had slowed to 2.9% in the second quarter of 2003 and headline inflation had decelerated in October and November.

The central bank’s Monetary Policy Committee (MPC) left the deposit rate at 19.25% and the lending rate at 20.25%, it said in a statement.

The median forecast in a poll of 14 analysts was for the MPC to hold rates, although six analysts had expected a hike of between 100 and 300 basis points.

Second-quarter growth slowed to an annual 2.9% from 3.9% in the first quarter, implying growth of 3.8% for the whole of fiscal 2022/23, which ended on June 30, the MPC said. The economy grew by 6.7% in fiscal 2021/22.

“Furthermore, real GDP growth is expected to slow down further during fiscal year 2023/24 before gradually picking up thereafter,” the MPC statement said, adding that global economic growth had slowed and the outlook revised downwards as well.

Headline inflation slowed to 34.6% in November from a record 38.0% in September.

“In light of the above, the MPC decided that current policy rates remain appropriate at this juncture,” it said.

Some analysts had expected a quick increase in rates after the political tensions of the Dec. 10-12 presidential election that swept President Abdel Fattah al-Sisi into a third, six-year term. Egypt had been widely expected to delay hard economic measures until after the vote.

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