Egypt Monetary Policy June 2020

Egypt

Egypt: Central Bank leaves rates unchanged at June meeting

June 25, 2020

At its scheduled monetary policy meeting on 25 June, the Central Bank of Egypt (CBE) left the overnight deposit, overnight lending, and main operation rates unchanged at 9.25%, 10.25% and 9.75%, respectively, as expected by most market analysts.

The decision to keep rates unchanged in June came despite inflation slowing to 4.7% in May, which was down from 5.9% in April, the lowest reading in six months and further clear of the CBE’s Q4 CY 2020 target range of 6.0% to 12.0%. Moreover, economic activity remains under pressure due to the coronavirus pandemic, after growth slowed to 5.0% in January–March (October–December: +5.6% year-on-year), marking the lowest reading in nearly three years. A weakening Egyptian pound and the desire of the CBE to monitor the effects of the last interest rate cut likely drove the decision to stay put. On 16 March, Egypt’s Central Bank cut rates by 300 basis points after coronavirus and related containment measures hit economic activity.

Regarding the outlook, the CBE said that it would closely monitor “all economic developments and will not hesitate utilize all available tools to support the recovery of economic activity”. The next monetary policy meeting is set for 13 August.

FocusEconomics Consensus Forecast panelists see the overnight deposit rate ending CY 2020 at 9.25% and CY 2021 at 8.94%.


Author:, Economist

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Egypt Monetary Policy Chart


Egypt Monetary Policy June 20 20

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


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