Egypt’s central bank has kept key interest rates unchanged on Thursday at first monetary policy meeting in 2023.
The Central Bank of Egypt’s (CBE) Monetary Policy Committee (MPC) decided to keep the overnight deposit rate, overnight lending rate, and the rate of the main operation unchanged at 16.25 percent, 17.25percent, and 16.75 percent, respectively. The discount rate was also kept unchanged at 16.75 percent.
Annual inflation soared to a five-year high of 21.3 percent in December from 18.7 percent in November.
The North African country has allowed its currency to depreciate by nearly 50 percent over the last year, with the official rate of the pound now at EGP 30 to the dollar.
Foreign investors this month had begun returning to the Egyptian treasuries market, lessening the urgency of making interest rate hikes to attract them.
“As the future path of inflation is a function of the cumulative tightening in the monetary policy stance to date and the lag with which monetary policy tools operate, the MPC decided to maintain key policy rates unchanged in today’s meeting in order to assess the impact of the implemented front-loaded tightening policies in a data-driven manner.” MPC statement read.
“The MPC reiterates that the path of future policy rates remains a function of forecasted inflation rather than prevailing inflation rates and notes that maintaining tight monetary conditions proves to be a necessary condition to achieve the CBE’s upcoming inflation targets and price stability over the medium term.”
