The Central Bank of Egypt (CBE) decided to cut key policy rates by 50 bps at its recent MPC meeting. The overnight deposit rate is now set at 8.25%, the overnight lending rate at 9.25%, and the main operation rate and the discount rates at 8.75%. This brings the cumulative cut to key policy rates to 400 bps so far this year. Real interest rates remain relatively high at around 4.3% and with US dollar bearishness likely to become entrenched in coming, demand for Egyptian assets will likely remain strong. We suspect that the IMF may have also encouraged the most recent rate cut under a monetary policy consultation clause set up under a separate Stand-By Arrangement.
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