Egypt: Central Bank of Egypt leaves rates unchanged in December
CBE’s sixth hold meets expectations: At its meeting on 26 December, the Monetary Policy Committee of the Central Bank of Egypt (CBE) stayed put once again, leaving the overnight deposit, overnight lending and the main operations rates unchanged at record highs of 27.25%, 28.25% and 27.75%, respectively. The hold, which has been priced in by markets, was the sixth consecutive and followed a cumulative hike of 1,900 basis points since March 2022.
Inflation remains too far above target: The Central Bank decided to hold due to persistently above-target inflation. The CBE acknowledged that both headline and core inflation eased through November, and expects them to cool further in 2025 amid contained real wage growth and improved inflation expectations. That said, inflation remains markedly above the CBE’s target; accordingly, the Bank deemed restrictive monetary policy still necessary. The CBE noted upside risks to the inflation outlook include an escalation of geopolitical tensions, a resurgence of protectionist measures and a higher-than-projected impact of fiscal measures. Meanwhile, the Central Bank extended its inflation target range of 5.0–9.0% and 3.0–7.0% to Q4 2026 from Q4 2024 and Q4 2028 from Q4 2026, respectively, in order to provide more room to weather price shocks.
Policy easing kickoff on the horizon: The Central Bank provided no explicit forward guidance, indicating instead that the policy stance would remain data-dependent. All of our panelists expect the CBE to begin cutting rates in calendar year 2025. The next meeting is set for 20 February.