Egypt’s central bank has on Thursday kept its key interest rates unchanged in an attempt to control the recent increase in inflation rates, explaining that both economic growth and core inflation were slowing.
The Central Bank of Egypt’s (CBE) Monetary Policy Committee (MPC) decided to keep the overnight deposit rate, overnight lending rate, and the rate of the main operation unchanged at 19.25 percent, 20.25 percent, and 19.75 percent, respectively, CBE explained in a statement.
The CBE also held its discount rate at 19.75 percent.
“The MPC decided to keep policy rates unchanged and will continue assessing the cumulative impact of previously enacted tightening policies and its transmission to the economy in a data-driven manner.” the statement read.
“The MPC reiterates that the path of future policy rates remains a function of forecasted inflation rather than prevailing inflation rates and will continue to monitor all incoming developments underlying the economic outlook. The committee will not hesitate to utilise all its available tools to ensure that the policy stance is set at sufficiently restrictive levels with the aim of attaining the CBE’s upcoming inflation targets of 7 percent (± 2 percentage points) on average by 2024 Q4 and 5 percent (± 2 percentage points) on average by 2026 Q4.”
In August, Egypt’s annual urban headline inflation increased to 37.4 percent from 36.5 percent in July. The annual core inflation has witnessed a slight fall for two consecutive months to record 40.7 percent and 40.4 percent in July and August, respectively, compared to 41.0 percent in June.
“While annual food inflation is still increasing, it is being driven by volatile items as opposed to core food items in earlier months. Accordingly, inflation dynamics for both July and August 2023 reflect mainly the combined effect of adverse weather conditions further amplifying the seasonal increase in prices of agricultural products, as well as, supply chain disruptions.”
