Despite Slowing Inflation CBE Holds Interest Rates Steady
In a widely anticipated decision, the Central Bank of Egypt (CBE) chose to leave key interest rates unchanged during its fourth policy meeting of the year on Thursday, citing the need for caution amid persistent inflationary risks and ongoing tax policy adjustments.
The CBE maintained the overnight deposit rate at 24% and the lending rate at 25%, marking a pause after two consecutive cuts earlier this year that signaled a shift toward a more flexible monetary stance.
The decision comes despite a notable easing in inflation. Egypt's annual urban inflation rate slowed to 14.8% in June, down from 16.9% in May, according to data released Wednesday by the Central Agency for Public Mobilization and Statistics (CAPMAS). The moderation was driven largely by a decline in food and energy price pressures.
Still, the central bank emphasized in its post-meeting statement that it prefers to "remain cautious in adjusting rates further" until the full impact of recent economic changes — particularly amendments to the Value Added Tax (VAT) law — is assessed.
'While inflation is on a declining path, underlying risks and tax-related adjustments necessitate a measured approach,' a senior CBE official told Masrawy. 'Stability is essential at this stage to anchor expectations and support medium-term growth.'
In April and May, the central bank had slashed rates by a cumulative 325 basis points, its first rate cuts in over four years. Those moves were seen as part of a broader pivot to stimulate private sector activity and revitalize economic growth amid currency volatility and external debt challenges.
The pause suggests policymakers are now balancing between supporting recovery and guarding against premature easing that could reignite price pressures or undermine investor confidence.
Analysts say the CBE's current strategy reflects a broader goal of anchoring macroeconomic stability while preparing for further monetary easing later in 2025, provided inflation continues to decline and fiscal reforms stay on track.
Meanwhile, Egypt's foreign currency reserves rose by $174 million in June, reaching their highest level since early 2021 — a signal of growing confidence in the country's external position.
The next interest rate decision is expected in September, and market observers will closely monitor inflation data, tax implementation outcomes, and global monetary trends to gauge the CBE's next move.
read more
CBE: Deposits in Local Currency Hit EGP 5.25 Trillion
Morocco Plans to Spend $1 Billion to Mitigate Drought Effect
Gov't Approves Final Version of State Ownership Policy Document
Egypt's Economy Expected to Grow 5% by the end of 2022/23- Minister
Qatar Agrees to Supply Germany with LNG for 15 Years
Business
Oil Prices Descend amid Anticipation of Additional US Strategic Petroleum Reserves
Business
Suez Canal Records $704 Million, Historically Highest Monthly Revenue
Business
Egypt's Stock Exchange Earns EGP 4.9 Billion on Tuesday
Business
Wheat delivery season commences on April 15
News
Israeli-Linked Hadassah Clinic in Moscow Treats Wounded Iranian IRGC Fighters
News
China Launches Largest Ever Aircraft Carrier
Sports
Former Al Zamalek Player Ibrahim Shika Passes away after Long Battle with Cancer
Videos & Features
Tragedy Overshadows MC Alger Championship Celebration: One Fan Dead, 11 Injured After Stadium Fall
Lifestyle
Get to Know 2025 Eid Al Adha Prayer Times in Egypt
Business
Fear & Greed Index Plummets to Lowest Level Ever Recorded amid Global Trade War
News
"Tensions Escalate: Iran Probes Allegations of Indian Tech Collaboration with Israeli Intelligence"
News
Flights suspended at Port Sudan Airport after Drone Attacks
Videos & Features
Video: Trending Lifestyle TikToker Valeria Márquez Shot Dead during Live Stream
Arts & Culture
Hawass Foundation Launches 1st Course to Teach Ancient Egyptian Language
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Al-Ahram Weekly
3 hours ago
- Al-Ahram Weekly
Egyptian expat remittances jump 69.6% to $32.8 bln in July-May FY24/25: CBE - Economy
Remittances from Egyptians working abroad surged by 69.6 percent year-on-year from July 2024 to May 2025, reaching approximately $32.8 billion, the Central Bank of Egypt (CBE) announced on Wednesday. This marks a significant rebound compared to the $19.4 billion recorded in the same period of fiscal year 2023/2024. According to the CBE data, remittance inflows also saw strong performance from January to May 2025, rising 59 percent year-on-year to about $15.8 billion, up from $9.9 billion in the same period in 2024. May 2025 witnessed a record-breaking $3.4 billion in remittances on a monthly basis, the highest level ever recorded for May, representing a 24.2 percent increase compared to $2.7 billion in May 2024. The sharp rise in remittance inflows comes amid broader efforts by the Egyptian authorities to stabilize foreign exchange markets, attract hard currency, and enhance financial flows from abroad. Remittances remain one of Egypt's most vital sources of foreign currency, alongside the revenues from the Suez Canal, tourism, and foreign direct investment. The surge in remittance inflows that Egypt has recently witnessed is one of the country's achievements under the ongoing Extended Fund Facility's (EFF) $8 billion loan programme. Follow us on: Facebook Instagram Whatsapp Short link:
See - Sada Elbalad
4 hours ago
- See - Sada Elbalad
Central Bank: Remittances from Egyptians Abroad Jump to $32.8 Billion in 11 Months
Amir Hagag The Central Bank of Egypt (CBE) stated that remittances from Egyptians working abroad achieved a significant surge in the period from July to May of the 2024/25 fiscal year, increasing by 69.6% to approximately $32.8 billion (compared to approximately $19.4 billion during the same period the previous year). The period from January to May 2025 also witnessed a 59% year-on-year increase in remittances, reaching approximately $15.8 billion (compared to approximately $9.9 billion). On a monthly basis, remittances in May 2025 increased by 24.2% year-on-year to approximately $3.4 billion (compared to approximately $2.7 billion). These are historic flows that have never occurred in May of any year. read more CBE: Deposits in Local Currency Hit EGP 5.25 Trillion Morocco Plans to Spend $1 Billion to Mitigate Drought Effect Gov't Approves Final Version of State Ownership Policy Document Egypt's Economy Expected to Grow 5% by the end of 2022/23- Minister Qatar Agrees to Supply Germany with LNG for 15 Years Business Oil Prices Descend amid Anticipation of Additional US Strategic Petroleum Reserves Business Suez Canal Records $704 Million, Historically Highest Monthly Revenue Business Egypt's Stock Exchange Earns EGP 4.9 Billion on Tuesday Business Wheat delivery season commences on April 15 News Israeli-Linked Hadassah Clinic in Moscow Treats Wounded Iranian IRGC Fighters Arts & Culture "Jurassic World Rebirth" Gets Streaming Date News China Launches Largest Ever Aircraft Carrier Videos & Features Tragedy Overshadows MC Alger Championship Celebration: One Fan Dead, 11 Injured After Stadium Fall Lifestyle Get to Know 2025 Eid Al Adha Prayer Times in Egypt Arts & Culture South Korean Actress Kang Seo-ha Dies at 31 after Cancer Battle Business Egyptian Pound Undervalued by 30%, Says Goldman Sachs Sports Get to Know 2025 WWE Evolution Results News "Tensions Escalate: Iran Probes Allegations of Indian Tech Collaboration with Israeli Intelligence" News Flights suspended at Port Sudan Airport after Drone Attacks
Al-Ahram Weekly
6 hours ago
- Al-Ahram Weekly
FACTBOX: Egypt's current account deficit narrows by 22.6% in 9 months of FY24/25 per BoP data - Economy
Egypt's current account deficit narrowed by 22.6 percent year-on-year during the first nine months (July 2024–March 2025 ) of FY2024/2025, which ended at end of June, reaching $13.2 billion, down from $17.1 billion in the same period last fiscal year, the Central Bank of Egypt (CBE) announced on Tuesday. According to the balance of payments (BoP) data, this improvement was primarily driven by a stronger performance in the third quarter of 2025 (January–March). Despite the positive momentum, BoP recorded an overall deficit of $1.9 billion during the same period, reversing a surplus of $4.1 billion posted a year earlier. The shift was mainly attributed to a significant decline in capital and financial account inflows, which fell to $7.7 billion from a record high of $20 billion. The previous figure had been boosted by the one-off $15 billion Ras El-Hekma deal. Egypt is engaged in $8 billion loan deal with the International Monetary Fund (IMF). An IMF mission is expected to visit Egypt in September for the discussions on the fifth and sixth reviews of the deal, with projections that both reviews will be completed in December. The First review of the newly approved Resilience and Sustainability Facility (RSF) is also scheduled to be completed with these two reviews. The completion of the whole three reviews is anticipated to refresh Egypt's treasury with a total of over $2.6 billion. Key positive contributors to the current account's improvement Remittances from Egyptians working abroad surged by 82.7 percent to $26.4 billion, up from $14.5 billion, providing significant support to the current account. Meanwhile, the investment income deficit narrowed by 13.4 percent to $12.2 billion, bolstered by a 74 percent rise in investment income receipts to $1.9 billion and a 6.9 percent decline in investment income payments to $14.1 billion. Moreover, tourism revenues rose by 15.4 percent to $12.5 billion, up from $10.9 billion in the previous year, supported by a rise in tourist nights to 134.3 million from 116.4 million. Challenges limiting further improvement Regarding the BoP deficit, the data showed that the oil trade deficit more than doubled to $10.3 billion, up from $5.1 billion, primarily due to a surge in oil imports. Oil imports climbed to $14.5 billion from $9.7 billion, driven by higher imports of natural gas, oil products, and crude oil. Meanwhile, oil exports fell to $4.2 billion, primarily due to a decrease in crude oil and gas shipments, although an increase in oil product exports partially offset the decline. The non-oil trade deficit also widened to $28 billion, up from $23.7 billion in the previous period. Imports of non-oil goods increased by $10.3 billion to $53.6 billion, led by key commodities such as wheat, soybeans, maize, car and tractor parts, and raw tobacco. In comparison, non-oil exports increased by $6.1 billion to $25.6 billion, driven by growth in shipments of gold, ready-made garments, fruits, aluminium products, and electrical cables. Furthermore, the data showed that Suez Canal revenues dropped sharply by 54.1 percent to just $2.6 billion, compared to $5.8 billion the previous year. This was attributed to disruptions in maritime navigation in the Red Sea, leading to a 61.9 percent decline in net tonnage and a 44.8 percent drop in the number of transiting vessels. Capital and financial account: Cooling inflows The capital and financial account registered net inflows of $7.7 billion, a steep drop from $20 billion the previous year. Foreign direct investment (FDI) stood at $9.8 billion, down from $23.7 billion, which had included the $35 billion Ras El-Hekma deal. FDI in Egypt's oil sector returned to positive territory with a net inflow of $669.6 million, reversing a $175.6 million outflow last year. This came as inflows to the sector reached $5.0 billion, while outflows dropped to $4.3 billion due to lower cost-recovery payments to foreign partners. FDI inflows to the non-oil sector amounted to $9.1 billion, driven by $4.3 billion in greenfield investments and capital increases, $3.1 billion in reinvested earnings, $1.6 billion in real estate purchases by non-residents, and $396.1 million from the sales of domestic entities to foreign investors. In March, Egypt's headline Purchasing Managers' Index (PMI) for the non-oil private sector fell to 46.7, down from 46.9 seen in February, according to Standard and Poor's (S&P) Global index data. The index's latest reading for June showed that conditions across Egypt's non-oil private sector economy deteriorated, as demand weakness and declining output continued to weigh on business activity. Portfolio investments also declined, with net inflows reaching just $2.1 billion, compared to $14.6 billion in the corresponding period of the previous fiscal year. Meanwhile, Egypt recorded net repayments of $2.6 billion in medium- and long-term loans and facilities, as principal repayments surged to $10.1 billion, compared to $5.9 billion the previous year. Disbursements increased to $7.5 billion from $4 billion. The CBE also saw a net increase in liabilities of $429.9 million, reversing a net outflow of $1.4 billion in the same period a year prior. Follow us on: Facebook Instagram Whatsapp Short link:
