Egypt Monetary Policy May 2022


Egypt: Central Bank hikes rates further in May meeting

May 19, 2022

At its monetary policy meeting on 19 May, the Central Bank of Egypt (CBE) increased all of its key rates by 200 basis points, bringing the overnight deposit, the overnight lending and main operations rates to 11.25%, 12.25% and 11.75%, respectively. The move, which marked the second rate increase since July 2017, came on the heels of March’s 100 basis-point hike and brought the rates nearly back to early 2020 levels.

The Bank’s decision was driven by the desire to rein in inflation and anchor inflation expectations. Both headline and core inflation continued their upward trends through April, coming in above the upper bound of the Central Bank’s 5.0–9.0% target range and reaching their highest levels since May 2019 and April 2018, respectively. The Bank acknowledged the depreciation of the Egyptian pound in March, and that the holy month of Ramadan and other holidays have had an impact on prices. Moreover, the upward pressure has been exacerbated by the fallout from the war in Ukraine and extreme weather events on prices for wheat and fertilizer.

With regard to forward guidance, the Bank did not provide hints on future policy moves. The tone of the communiqué was largely unchanged, as it once again reiterated that “the path of future policy rates remains a function of inflation expectations, rather than of prevailing inflation rates”. It also assured that it will “continue to closely monitor all economic developments and will not hesitate to utilize all available tools to achieve its price stability mandate over the medium term”.

The next monetary policy meeting is set for 23 June.

Our panelists are currently assessing the CBE’s latest move, and will need time to update their forecasts.

Author:, Economist

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Egypt Monetary Policy Chart

Egypt Monetary Policy May 2022

Note: Overnight Deposit Rate in %.
Source: Central Bank of Egypt (CBE).

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