The Central Bank of Egypt (CBE) expects a significant drop in headline inflation in the first quarter of 2025, driven by "the cumulative impact of monetary policy tightening and the favourable base effect." Despite acknowledging rising inflation risks stemming from global uncertainties, including US trade protectionism and geopolitical tensions, the CBE remains optimistic about its inflation outlook. While inflation is expected to continue declining throughout 2025, the pace may moderate due to fiscal tightening measures. The CBE anticipates underlying inflation gradually returning to its historical average, improving medium-term inflation expectations. Inflation slowed in the latter half of 2024, stabilising at 24 per cent in January 2025, with core inflation holding steady at 22.6 per cent. While food inflation decreased to 20.8 per cent, non-food inflation remained elevated at 25.5 per cent, reflecting past economic shocks. The CBE is committed to its inflation target and will maintain a tight monetary policy to manage inflation expectations and demand-side pressures. Future policy decisions will be made on a meeting-by-meeting basis, taking into account evolving risks and economic conditions. Amidst persistent global and regional uncertainties, the CBE aims to balance inflation control with economic stability, supporting recovery while mitigating external shocks. Attribution: Amwal Al Ghad English Download
