Egypt central bank to keep rates unchanged in Q4

 

Egypt central bank to keep rates unchanged in Q4

Ahmed Kamel

Egypt's monetary policy will reflect all possible economic developments in the coming months to maintain stabilized prices and market conditions. The Monetary Policy Committee (MPC) of the Central Bank of Egypt (CBE) may keep rates steady in its next meeting in September.

There will be two more meetings in November and December.

The MPC said it would closely monitor all economic developments and would not hesitate to utilize all available tools “to support the recovery of economic activity”.

It kept the overnight interest rates unchanged last week as the annual headline urban inflation fell to 4.2 per cent in July from 5.6 per cent in June.

The overnight deposit rate, overnight lending rate, and the rate of the main operation unchanged at 9.25 per cent, 10.25 per cent, and 9.75 per cent, respectively. The discount rate was also kept unchanged at 9.75 per cent. 

The MPC forecast the annual headline inflation rate to remain below the inflation target’s mid-point of nine per cent on average in the fourth quarter (Q4) 2020.

“Yet with the ongoing high level of global uncertainty, and given the preemptive measures taken by the CBE, including the reduction of 300 basis points during the unscheduled MPC meeting on March 16, 2020, the MPC decided to keep key policy rates unchanged,” the MPC statement explained.

Real gross domestic product (GDP) will be one of the key determinants of the monetary policy in the coming months as Egypt is trying to overcome the repercussions of the coronavirus pandemic. 

Earlier, the International Monetary Fund (IMF) said it was agreed that Egypt’s monetary policy should remain data driven and anchor inflation expectations within the CBE’s target range.