Egypt: Central Bank leaves rates unchanged at June meeting
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.