On Thursday, the 22nd of August 2019, the Central Bank of Egypt, the Northeast African country connecting Middle East and Africa and world's 21st-largest economy by purchasing power parity and 43rd-largest by nominal GDP, had trimmed its overnight deposit rate by 150-basis point to 14.25 percent, remarking the nation’s second interest rate cut this year as July inflation indicators were lower-than-anticipated.
In fact, following a meet of its monetary policy members, the Central Bank of Egypt had decided to slash overnight lending fee by 150-basis point to 15.25 percent, the bank said in a statement on Thursday (August 22nd).
More importantly, latest interest rate cut on excess reserves came amid a compound market backdrop all over the world, when a majority of Central Banks had been leaning towards a lower interest rate to revive domestic economy amid recession fears and a sharp slowdown in global economy.
Nonetheless, an analysts’ poll was expecting a rate cut of 100-basis point, while a 150-basis point came as a surprise move to many. Apart from that, latest move of Egypt’s Central Bank came after the nation’s inflation had slowed down to 8.7 percent in July from a prior 9.4 per cent a month earlier, while a senior economist for the Middle East at Oxford Economics, Maya Senussi said, “The drop in the inflation emboldened them to go deeper.
The decision also probably reflected low trending oil prices, And the assumption that the second-round inflationary impact of the subsidy cuts will be limited. ” Meanwhile, analysts were expecting further rate cuts, as Egyptian Investment Bank CI Capital had already forecasted a rate cut of 1 percent as early as by next month.