On Thursday, the Monetary Policy Committee (MPC) of the Central Bank of Egypt (CBE) decided to keep the interest rates unchanged for the sixth time in a row since December 2020.
It decided to keep the overnight deposit rate, overnight lending rate, and the rate of the main operation unchanged at 8.25 percent, 9.25 percent, and 8.75 percent, respectively.
The discount rate was also kept unchanged at 8.75 percent.
The MPC based its decision on the readings of June’s inflation, as annual headline urban inflation marginally increased to 4.9 percent in June 2021 from 4.8 percent in May 2021, reflecting an unfavorable base effect for the second consecutive month.
The MPC expected annual inflation to continue to be affected by unfavorable base effects in the near term, adding that the slight uptick in June 2021 was driven by the higher annual inflation of food items, which accelerated to 3.4 percent in June 2021 from 1.7 percent in May 2021, reflecting the higher annual contribution of subsidized and core food items.
Meanwhile, annual non-food inflation declined to 5.6 percent in June 2021 from 6.3 percent in May 2021, which is its lowest recorded level since June 2014.
On the other hand, annual core inflation increased to 3.8 percent in June 2021 from 3.4 percent in May 2021, according to the MPC.
On the real GDP, the MPC estimated its growth to have recorded a preliminary figure of 2.8 percent in FY 2020/21, compared to 3.6 percent in the previous fiscal year, reflecting the full year's impact of the pandemic’s outbreak and its related containment measures on economic activity.
Additionally, sectoral growth continued to pick up, as detailed data up to Q1 of 2021 showed that it remains supported by the positive contributions of trade, construction, communications and natural gas extractions.
Meanwhile, the unemployment rate rose slightly to 7.4 percent in Q1 of 2021, up from 7.2 percent in Q4 of 2020.
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