Central Bank of Egypt leaves rates unchanged in November

Bank’s fifth consecutive hold meets expectations: At its meeting on 21 November, the Monetary Policy Committee of the Central Bank of Egypt (CBE) held fire again, leaving the overnight deposit rate unchanged at a record high of 27.25%. The hold, which was priced in by markets, was the fifth consecutive hold and followed a cumulative hike of 1,900 basis points since March 2022.

Slow disinflation motivates hold: While both headline and core inflation remain on an apparent downward trend, the speed of the moderation has been restrained by the withdrawal of subsidies as part of the IMF financing deal, likely pushing the CBE to hold. In addition, risks to the inflation outlook remain skewed to the upside, according to the Bank. Regarding activity, the CBE stated that high-frequency data suggests that the economy seemingly expanded at a faster pace in July–September compared to the prior three months’ 2.4% increase, giving the Bank room to maintain rates at an elevated level.

Aggressive policy easing in 2025: The Central Bank provided no explicit forward guidance, indicating instead that its monetary policy stance would remain data-dependent. All of our panelists, bar one, expect the CBE to hold again at its next and final meeting of 2024 on 26 December; in calendar year 2025, the Consensus is for over 1,000 basis points of cuts.

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