Percentage Point Cut in Overnight Deposit Rate Still Leaves Such at 24%, well above 13.9% CPI Inflation – Currency Thoughts

Percentage Point Cut in Overnight Deposit Rate Still Leaves Such at 24%, well above 13.9% CPI Inflation

May 22, 2025

Today’s interest rate cut at the Central Bank of Egypt had been anticipated but was considerably smaller than prior and initial cut  of 225 basis points done in April. A released statement attributes a significant deceleration of inflation in this year’s first quarter to “monetary tightening, favorable base effects, and the fading impact of previous shocks.” Upside inflation risks are also mentioned such as “trade tensions, current exchange rate dynamics, and the normalization of sovereign risk levels.” The egyptian pound has a history of sharp stochastic devaluations such as 19% in October 2022, 16% in January 2o23 and 37.5% in March 2024 relative to the U.S. dollar. Monetary officials wish to proceed with caution and, for now, leaving their interest rate well above on-year inflation.

Copyright 2025, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

Tags: Central Bank of Egypt

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on Thursday, May 22nd, 2025 at 12:18 pm and is filed under Central Bank Watch.
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