Egypt: Central Bank cuts rates in November after inflation nosedives in October
November 14, 2019
The Central Bank of Egypt (CBE) slashed interest rates by one percentage point at its monetary policy meeting on 14 November, as had been broadly expected by market analysts. The overnight deposit rate now stands at 12.25%, the overnight lending rate at 13.25% and the main operation rate at 12.75%. Interest rates have now been slashed by an accumulated 4.5 percentage points since the beginning of this calendar year.
The CBE’s move came after inflation moderated substantially in October to 3.1%, down from 4.8% in September and marking the lowest reading in 14 years. With inflation well below the CBE’s 6.0–12.0% target range and major central banks turning more accommodative this year, the CBE seemingly had plenty of space to cut rates in November.
The CBE gave little away in terms of forward guidance in its 14 November communiqué. Nevertheless, if inflation remains low in the coming months, the CBE is likely to continue trimming rates to shift it closer to the 6.0–12.0% target range and support economic growth.
The next CBE meeting is set to take place on 26 December.
Author: Edward Gardner, Economist