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Egypt Monetary Policy December 2023

Egypt: Central Bank holds fire in December, meeting market expectations

At its 21 December meeting, the Central Bank of Egypt (CBE) stayed put, leaving the overnight deposit, overnight lending and main operation rates unchanged for the third consecutive meeting at 19.25%, 20.25% and 19.75%, respectively. The move, which had been priced in by markets, was the third consecutive hold.

The hold was driven by moderating price pressures: Both headline and core inflation eased in October and November, in line with the CBE’s expectations. The Bank asserted that its restrictive monetary policy stance was adequate to anchor a downward trend in inflation. Regarding activity, the CBE highlighted that economic growth in FY 2023 (July 2022–June 2023) slowed notably from the prior year and that it expected the economy to slow again in FY 2024 (July 2023–June 2024).

The Bank’s communiqué was void of explicit forward guidance but echoed prior releases, stating that future policy moves would depend on inflation expectations, rather than historical data. The CBE reiterated that it was ready and willing to use all available tools to bring inflation back to its 5.0–9.0% target by Q4 2024. Almost all of our panelists expect the Bank to embark on a loosening cycle in calendar year 2024.

The next scheduled monetary policy meeting is set for 1 February 2024.

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