As growth slows, Egypt’s Central Bank maintains constant interest rates. The Monetary Policy Committee of the central bank maintained the deposit rate at 19.25% and the lending rate at 20.25%.
Egypt’s central bank left its overnight interest rates constant as expected, citing a slowing of GDP growth to 2.9% in the second quarter of 2003 and a slowing of headline inflation in October and November.
The Monetary Policy Committee (MPC) of the central bank maintained the deposit rate at 19.25% and the loan rate at 20.25%, according to a statement.
In a poll of 14 analysts, the consensus estimate was for the MPC to hold rates steady; however, six analysts predicted a rate hike of 100 to 300 basis points.
The MPC said that second-quarter growth fell to an annual 2.9% from 3.9% in the first quarter, implying growth of 3.8% for fiscal 2022/23, which ended on June 30. In fiscal 2021/22, the economy increased by 6.7%.
“Furthermore, real GDP growth is expected to slow further during fiscal year 2023/24 before gradually picking up thereafter,” the MPC stated, adding that global economic development had slowed and the outlook had been revised negative.
In November, headline inflation fell to 34.6% from a record 38.0% in September.
“In light of the above, the MPC decided that current policy rates remain appropriate at this juncture,” according to the statement.
After the political unrest surrounding the Dec. 10–12 presidential election, which saw President Abdel Fattah al-Sisi win a third, six-year term, some observers had anticipated a sharp hike in rates.
Hard economic actions by Egypt were widely expected to be postponed until after the referendum.