By Fiona Nanna, ForeMedia News

2 minutes read. Updated 8:00PM GMT Mon, June 10, 2024

For the first time in 2024, Egypt’s Central Bank has held its interest rate steady at 27.75%, following two substantial hikes totaling 800 basis points earlier this year. This decision marks a significant moment in the country’s economic policy.

The move comes as inflation showed a notable decrease, dropping to 28.1% in May from 32.5% in April. This positive trend aligns with the government’s recent decision to liberalize the exchange rate of the Egyptian pound on May 23.

The Central Bank credits its monetary tightening policy for these improvements, stating that the policy has successfully reduced inflation and stabilized exchange rates. The Bank’s report predicts that inflation will continue to decline throughout 2024, with a more pronounced reduction expected in the first half of 2025.

The high inflation rates experienced over the past year were primarily driven by rapid money supply growth. However, the recent efforts to curb excess liquidity, dismantle the parallel currency market, and lower inflation suggest that Egypt’s economy is on a path to recovery and stability.