The Central Bank of Egypt (CBE) announced the cancellation of its Monetary Policy Committee (MPC) meeting scheduled for March 28, 2024 [reuters.com]. This decision comes after a significant interest rate increase enacted during a special MPC meeting on March 6th.
The March 6th meeting saw a hefty 600 basis point hike in key rates, aiming to accelerate monetary tightening and combat inflation. The CBE set the overnight lending rate at 28.25% and the overnight deposit rate at 27.25%. Additionally, the bank opted for a free float of the Egyptian pound.
The announcement triggered a record depreciation of the Egyptian pound against the US dollar. It weakened past 50 EGP per USD, a significant decline from the previously defended level of around 30.85 EGP. Despite the devaluation, Egyptian sovereign dollar bonds experienced a rally.
The CBE deputy governor assured the public that the current tightening cycle is temporary and interest rates will eventually decrease. The next scheduled MPC meeting remains set for May 23, 2024.
