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Egypt holds key policy rates steady as inflation eases

By Pramod Kumar
A woman at a supermarket in Cairo. Egypt's annual headline and core inflation fell for the fifth consecutive month Reuters/Amr Abdallah Dalsh
A woman at a supermarket in Cairo. Egypt's annual headline and core inflation fell for the fifth consecutive month

Egypt’s central bank left its key policy rates unchanged as inflation continued to subside amid softening growth.

The lending and deposit rates were kept intact at 28.25 percent and 27.25 percent.

Inflationary pressure has continued to subside with the gradual easing of previous shocks, the central bank said in a statement.

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Annual headline and core inflation fell for the fifth consecutive month to 25.7 percent and 24.4 percent in July 2024, respectively.

Moreover, the bank said that real domestic GDP growth has softened to 2.2 percent in the first quarter of 2024, compared to 2.3 percent in the fourth quarter of 2023.

“The softening is driven by declining public contribution to economic activity due to the impact of Red Sea maritime trade disruption on the service sector,” it stated.

Economic growth is predicted to recover gradually in 2024-25, with inflation declining “significantly” in the first quarter of 2025, the central bank said.

However, tighter global oil supplies, escalation of regional tensions, uncertainty on continuation of protectionist trade policies and higher than anticipated pass-through of fiscal measures pose a risk to the disinflation path.

Egypt has already signed an $8 billion expanded loan agreement with the International Monetary Fund, received an $8 billion funding package from the European Union, and a $6 billion loan from the World Bank Group.

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