Egypt is taking bolder actions in monetary policies to control the current economic challenges and can do even more, Central Bank of Egypt’s Governor Hassan Abdalla said at the IMF and World Bank’s Spring Meetings taking place in Washington on Thursday.
“Egypt has taken huge actions over the past few years to mitigate the impacts of the COVID-19 and the repercussions of the Russian-Ukrainian conflict on the Egyptian economy, and we are ready to do more,” said Abdalla.
Higher interest rates can do little to curb inflation, the CBE will not hesitate to do more, even using monetary policy to control inflation, but it needs to approach the issue with more caution, looking at the whole issue, not just monetary policy, Abdalla added.
“We are working very hard on increasing transmission mechanisms and we are doing several things that would allow us to have more effective interest rates,” Abdalla mentioned.
The CBE is currently working with the Ministry of Finance on fiscal and monetary policies to control the economic challenges that the country is facing.
“The market needs to see a true story and needs to see a way forward for some time, a plan for two three years. You cannot get back the confidence and the trust and managing expectations unless you have the whole full plan. And this is something I’m glad to tell you that we are working very closely with the government on,” Abdalla said.
Egypt has a solid banking system, which has helped the country to withstand economic and banking crises since 2008, Abdalla concluded.
The CBE has set a target of seven percent for inflation, plus or minus two percent, by the fourth quarter of next year, while consumer prices have surged by 32.7 percent in March, the highest in six years.
The CBE is set to hold its Monetary Policy Committee (MPC) in May, in which it will be reviewing interest rates amidst the current global and local economic developments.
