Supervisor Elham AbolFateh
Editor in Chief Mohamed Wadie

CBE Keeps Interest Rates Unchanged


Thu 20 Feb 2020 | 10:34 PM
Taarek Refaat

The Central Bank of Egypt (CBE) decided at its latest meeting to keep the overnight deposit & lending rates as well as the rate of the main operation at the level of 12.25%, 13.25% and 12.75% respectively.

The Monetary Policy Committee (MPC) also decided to keep the credit and discount rates at 12.75%.

The Central Bank stressed that the Committee will continue to follow all economic developments and will not hesitate to resume monetary easing provided that it continues to contain inflationary pressures.

The MPC said that the current rates of return are appropriate at the present time and are consistent with achieving the target inflation rate of 9 percent (± 3%) during the fourth quarter of 2020, and price stability in the medium term.

During the past year, the Central Bank of Egypt followed the policy of monetary easing and cut the interest rate 4 times in 2019, 3 times in a row in "August, September and November", in addition to a cut in the beginning of 2019 in February.

According to the data of the Central Agency for Public Mobilization and Statistics, the monthly inflation rate in Egypt rose by 0.8% compared to December 2019, while the annual inflation rate stood at 6.8% in January 2020, with no change.

On the other hand, the annual core inflation rate, measured by the CBE and excluding volatile commodities such as food, rose to 2.7% in January 2020, compared to 2.4% last December.

The pace and magnitude of future adjustments in the central bank’s benchmark interest rate will continue to rely on the consistency of inflation expectations with target rates, ensuring the continuation of the target downtrend.

The CBE, at its last meeting on November 14, to cut the interest rate by 100 basis points, after reducing the price by 150 and 100 basis points in August and September, respectively.

On November 3, 2016, the Central Bank decided to liberalize the exchange rate of the pound against foreign currencies, to determine the price according to the mechanisms of supply and demand.