Egypt: Central Bank leaves rates unchanged in October, in line with expectations
October 28, 2021
At its monetary policy meeting on 28 October, the Central Bank of Egypt (CBE) opted to leave the overnight deposit, overnight lending and main operation rates unchanged at 8.25%, 9.25% and 8.75%, respectively. The decision marked the eighth consecutive hold and was in line with market analysts’ expectations.
The Bank’s decision came amid relatively contained price pressures: Although inflation accelerated again in September, it remained within the 5.0%–9.0% target range. The Bank deemed the recent pickup in inflation to be largely due to a statistical effect and higher price pressures for food. Moreover, recent data revealed that activity continued to recover in the final quarter of FY 2021 (April–June), thanks to healthier domestic demand. These developments gave the Bank room to take a wait-and-see approach.
While the Bank did not provide explicit guidance on its future policy moves, the tone of the communiqué was unchanged, stating that the CBE “closely monitors all economic developments and will not hesitate to utilize all available tools to support the recovery of economic activity, within its price stability mandate”. It also added that the current monetary policy stance is in line with achieving the inflation target in the medium term. The majority of our panelists see rates remaining unchanged in the final stretch of the year and in 2022, although a few see room for rate cuts.
The next monetary policy meeting is set for 16 December.
Author: Marta Casanovas , Junior Economist