INTERNATIONAL – Egypt’s central bank made a surprise cut to its overnight interest rates on Thursday, citing a strong drop in inflation and an improvement in other macroeconomic indicators.
The bank lowered its deposit rate to 15.75 percent from 16.75 and its lending rate to 16.75 percent from 17.75, it said in a statement, its first-rate cuts since March 2018.
Ten out of 14 economists polled by Reuters said the bank’s Monetary Policy Committee (MPC) was unlikely to change its overnight rates, while only four expected it to cut them.
The MPC said data “continued to confirm the moderation of underlying inflationary pressures”, leading it to lower rates by 100 basis points.
“This remains consistent with tight real monetary conditions and with achieving the inflation target of 9 percent (plus or minus 3 percentage points) in 2020 Q4 and price stability over the medium term.”