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Following US Fed’s lead, MENA economies announce their latest move against inflation

The MPC reiterates that the path of future policy rates remains a function of forecasted inflation rather than prevailing inflation rates

Central banks of three prominent MENA (Middle East and North Africa region) economies left their overnight interest rates unchanged, thereby following the footsteps of the United States Federal Reserve, which kept its key rates unchanged at 5.25-5.50%.

The Jerome Powell-led Federal Open Market Committee (FOMC) held the rates steady at a 22-year high for the second time in a row, amid the United States economy showing strong resilience while inflation remained above the Federal Reserve’s 2% target level.

Also, the US GDP expanded at an annualised rate of 4.9% in the 2023 Q3.

Following the United States’ lead, Egypt’s central bank left its overnight interest rates unchanged, while stating that the monetary authority was focused on ‘future’ rather than ‘present inflation’ and that economic growth appeared to have been stable in the 2023 July-September quarter.

The central bank’s Monetary Policy Committee (MPC) left the lending rate at 20.25%, while the deposit rate stands at 19.25%.

“The MPC decided to keep policy rates unchanged and to continue assessing the cumulative impact of previously enacted tightening policies and its transmission to the economy in a data-driven manner,” the MPC statement said.

This move met the analysts’ expectations, who believed that despite Egypt’s record 38% inflation, the central bank would leave the key rates against the dollar unchanged until after a presidential election set for 2023 December.

“The MPC reiterates that the path of future policy rates remains a function of forecasted inflation rather than prevailing inflation rates,” the statement read, as it added that the economic growth appeared to have slowed in the financial year that ended in June 2023 and had remained at a reduced pace in the July-September quarter.

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