The Central Bank of Egypt (CBE) kept interest rates unchanged on Thursday, it said in a statement (pdf), citing a “slight decline” in core inflation and a “moderation” of real GDP growth.

Where rates stand: The overnight deposit rate is at 19.25%, the overnight lending rate is at 20.25%, while the main operation and disc. rates are both at 19.75%.

What they said: The Monetary Policy Committee (MPC) “decided to keep policy rates unchanged and will continue assessing the cumulative impact of previously enacted tightening policies and its transmission to the economy in a data-driven manner,” it said in the statement. Aside from a surpris e 100-basis-point ra te hike at its last meeting in August, the central bank has kept rates unchanged since March as it assesses the impact of 1k bps worth of rate hikes made in the preceding 12 months.

No surprise: All of the seven analysts and economists we surveyed in our interest rate poll ahead of last week’s meeting expected the MPC to hold rates steady. A number of analysts said that the bank will assess how the previous hikes are impacting the economy before it moves forward with another rate hike.

Is the tide turning on inflation? The central bank noted the slight dip over the summer in the rate of core inflation — which strips out volatile items such as food and fuel. It also pointed out that while food inflation continues to accelerate, it is being “driven by volatile items as opposed to core food items in earlier months,” adding that inflation dynamics in July and August were a result of seasonal increases in agricultural goods on the back of poor weather conditions, as well as supply chain disruptions.

Remember: Annual inflation clocked a new record high in August, though on a monthly basis price growth slowed for the third consecutive month to 1.6%, indicating weakening price pressures.

Analysts agree: “Inflationary pressures will likely continue to ease through the coming months as previous currency moves pass through the base, meaning that the Egyptian central bank’s hiking cycle is likely done for now,” analysts at Emirates NBD Bank PJSC said in a report picked up by Bloomberg.

Most still have their eye on the EGP: Analysts are expecting the central bank to devalue the currency again to coincide with the IMF’s anticipated review of the USD 3 bn loan program. “[The EGP] has lost nearly half of its value against the USD since March 2022. That may not be the end of it. There are at least three reasons why the country will likely devalue again: a large external-funding problem, limited sources of financing, and expectations that the currency would weaken again, which could prove to be self-fulfilling,” said Ziad Daoud, Bloomberg’s chief emerging markets economist.

The CBE’s decision got ink in the foreign press: Bloomberg | Reuters.

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