The central bank of Egypt slashed its key overnight deposit rate by 100bps to 15.75 percent on its February 14th 2019 meeting, while markets had expected it to remain steady at 16.75 percent. Policymakers noted that inflation rate and core inflation rate ticked up to 12.7 percent and 8.6 percent in January 2019, respectively, mainly due to unfavorable base effects. This comes after inflation declined to 12% in December, and then the CBE’s first inflation target of 13 percent (±3 percent) for 2018 Q4 that was announced in May 2017 has been achieved. Also, GDP growth came stronger at 5.5% in Q4 2018 from 5.3% in Q3 2018 and unemployment fell to 8.9%, its lowest level since December 2010. In addition, incoming data suggests further moderation in inflationary pressures. The central bank maintains its inflation target at 9 percent (±3 percent) on average during Q4 2020. The overnight lending rate and the discount rate were also cut to 16.75 percent and 16.25 percent, respectively. Interest Rate in Egypt averaged 11.84 percent from 1991 until 2019, reaching an all time high of 21.40 percent in October of 1991 and a record low of 8.25 percent in September of 2009.
Interest Rate in Egypt is expected to be 15.75 percent by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate Interest Rate in Egypt to stand at 13.75 in 12 months time. In the long-term, the Egypt Interest Rate is projected to trend around 12.75 percent in 2020, according to our econometric models.