Egypt: Central Bank leaves rates unchanged at May meeting
May 14, 2020
At its scheduled monetary policy meeting 14 May, 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. This comes after the CBE cut all interest rates on 16 March by 300 basis points due to the spread of coronavirus and related containment measures, which are restraining economic activity. The CBE also said at the time that its decision to cut rates would help to keep inflation within the Q4 CY 2020 target range of 6.0% to 12.0%.
Aside from the conventional policy moves, the CBE has been active on other fronts in recent weeks. The CBE has lowered the preferential interest rate on loans to vulnerable businesses, such as SMEs and tourism firms, in addition to low- and middle-income households, to 8.0% from 10.0%. It has also launched a new debt relief initiative for individuals at risk of default, permitted the delay of most loan repayments for six months, and launched an EGP 20 billion equity purchasing program.
Regarding the outlook, the CBE said on 14 May 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 25 June.
Author: Edward Gardner, Economist