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Egypt’s central bank leaves key interest rates steady

Egypt interest rates Reuters/Mohamed Abd El Ghany
The economy grew by an annual 3.9% in the last quarter of 2022 as well as the first quarter of 2023

Egypt’s central bank kept its overnight interest rates unchanged on Thursday, saying that growth had slowed in the fourth quarter and international commodity prices were easing.

As forecast by analysts, the bank left its lending rate at 19.25 percent and deposit rate at 18.25 percent, its monetary policy committee (MPC) said in a statement.

“Domestically, growth of real economic activity eased to 3.9 percent in 2022 Q4 compared to 4.4 percent in 2022 Q3,” the statement said. “Going forward, real GDP growth is expected to slow down in fiscal year 2022/23 compared to the previous fiscal year, before recovering thereafter.”

The median forecast in a Reuters poll of 14 analysts on Monday was for the bank to rates leave rates on hold despite inflation surging to 32.7 percent in March, just shy of an all-time high, and then slowing to 30.6 percent in April.

Three analysts had expected a 100 basis-point increase and a fourth a 200 bps increase.

The MPC said inflation had decelerated in part because disruptions to the domestic supply chain, commodity prices and the exchange rate had eased.

“On the global front, forecasts for key international commodity prices have been revised downwards compared to those underlying the previous MPC meeting,” the MPC said.

Since Russia’s invasion of Ukraine in February last year, causing investors to withdraw billions of dollars from the Egyptian treasury market, the central bank has raised rates by a cumulative 1,000 bps and allowed the currency to fall by half.

At its last meeting on March 30, the central bank raised interest rates by 200 bps, saying it aimed to check soaring inflation.