The Central Bank of Egypt’s (CBE) Monetary Policy Committee (MPC) held its key interest rates steady for the fifth time in a row during its meeting on Thursday, November 21.

The overnight deposit rate remains at 27.25%, the overnight lending rate at 28.25%, and the rate of the main operation at 27.75%. 

Additionally, the discount rate was kept unchanged at 27.75%.

The decision reflects the Committee’s assessment of recent global and domestic economic developments.

On the domestic front, the MPC stated that Q3 2024 indicators suggest an uptick in real GDP growth compared to the 2.4% recorded in Q2 2024, with further recovery expected in Q4.

However, economic output remains below potential, supporting a gradual disinflation path, it noted, adding that the unemployment rate slightly rose to 6.7% in Q3 2024, up from 6.5% in Q2, as job creation struggled to match the influx of new labor market entrants.

Inflation dynamics showed stability in October 2024, with annual headline inflation at 26.5%, marking three consecutive months of consistent rates.

Core inflation also eased to 24.4% from 25.0% in September, while food inflation dropped to 27.3%, the lowest in two years.

The committee noted that this figure reflects improved inflation expectations and suggests a gradual normalization of monthly inflation trends, though further administered price increases remain a risk.

Outlook and Policy Stance

It stated that inflation is expected to remain near current levels through the end of 2024, with risks tilted to the upside due to geopolitical tensions, potential trade barriers, and stronger-than-expected fiscal pass-through effects. However, inflation is projected to decline significantly starting in Q1 2025 as the impact of monetary tightening and favorable base effects take hold.

The MPC views the current monetary policy stance as suitable to contain inflationary pressures and remains committed to a data-driven approach. It emphasized readiness to use all available tools to achieve its inflation targets while closely monitoring economic and financial developments.

The decision signals a cautious yet optimistic outlook for Egypt’s economy, as the CBE aims to balance inflation control with fostering economic recovery in a challenging global environment.

Global Landscape

Globally, the MPC referred that inflation rates have declined due to monetary policy tightening across advanced and emerging economies, with some central banks beginning to ease rates while maintaining restrictive stances.

According to the MPC, economic growth remains stable but faces risks such as the impact of monetary tightening, geopolitical tensions, and potential protectionist policies. Meanwhile, global commodity prices, including energy, have largely moderated but remain susceptible to supply shocks such as trade disruptions and adverse weather conditions.