CAIRO, Feb 9 (Reuters) – Analysts expect Egypt’s central bank to cut its overnight interest rates by 100 basis points on Thursday, extending an easing cycle as inflation falls, a Reuters poll showed on Monday.
The median forecast of 14 economists surveyed in the poll is for the central bank’s Monetary Policy Committee (MPC) to lower the deposit rate to 19.0% and the lending rate to 20.0%. The rate for deposits now stands at 21% and for lending at 22%.
The committee began easing rates last April after having jacked the lending rate up to 27.25% as part of an $8 billion financial support package with the International Monetary Fund in March 2024, when it also slashed the exchange rate of the Egyptian pound against the dollar.
The increase made Egypt’s real interest rates among the highest in the world. Since April the central bank has cut rates by 725 basis points.
“Given Egypt’s improved external position, the EGP’s appreciation, the high real interest rate, the slowdown in input costs, the relative easing in geopolitical risks, and the expected decline in inflation rates, we see that the MPC has a window of opportunity to cut the policy rates by 150-200 bps,” Heba Monir of HC Securities & Investment wrote in a note.
Egypt’s annual urban consumer price inflation in December was at 12.3%, down from a peak of 38% in September 2023. January inflation figures are due out on Tuesday.
(Reporting by Patrick Werr; Editing by David Holmes)
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