Egypt Monetary Policy February 2018

Egypt

Egypt: Central Bank loosens stance in February

February 15, 2018

At its 15 February monetary policy meeting, the Central Bank of Egypt (CBE) slashed all its key interest rates by 100 basis points. The overnight deposit rate was cut to 17.75%, the overnight lending rate to 18.75% and the main operation rate to 18.25%. All decisions were in line with market expectations.

The move to loosen monetary policy came after price pressures continued to ease in January, with lower prices for food and non-alcoholic beverages more than offsetting higher regulated prices. Headline and core inflation now stand at over one-year lows, with headline inflation only slightly above the Central Bank’s 10.0%–16.0% target for Q4 2018. The sharp fall in inflation offered the Bank breathing room to lower rates to reduce firms’ borrowing costs and support investment. However, interest rates remain high by recent historical standards, to ensure inflation continues to trend downwards towards the target.

The communiqué contained little forward guidance, although the Bank judged it was still on track to bring inflation to 10.0%–16.0% by Q4 of FY 2018 and to single digits thereafter. FocusEconomics panelists largely concur and expect inflation to be comfortably within the band by the end of 2018. However, they continue to expect it will take longer to reduce inflation to single figures, as the country’s history of high inflation has generated elevated inflation expectations, which will continue to influence price-setting behavior. With inflation set to fall going forward as the impact of the government’s reform measures decreases, the Central Bank is likely to continue reducing rates this year to support the real economy.

The next monetary policy meeting will be held on 29 March.

FocusEconomics Consensus Forecast panelists expect the overnight deposit rate to end calendar year 2018 at 14.14% and calendar year 2019 at 12.72%.


Author:, Economist

Sample Report

Looking for forecasts related to Monetary Policy in Egypt? Download a sample report now.

Download

Egypt Monetary Policy Chart


Egypt Monetary Policy February 2018

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


Egypt Economic News

  • 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%.

    Read more

  • Egypt: Inflation slows in May, falling further below Central Bank target range

    June 10, 2020

    Consumer prices were broadly unchanged in May compared to the previous month, after increasing 1.3% in April.

    Read more

  • Egypt: Egypt PMI rebounds in May but remains in contraction territory

    June 3, 2020

    Egypt’s Purchasing Managers’ Index (PMI), which measures business activity in the non-oil private sector, rebounded to 40.7 in May from 29.7 in April, which had marked the lowest reading since the current survey began in April 2011 and reflected the effects of Egypt’s first full month with new social distancing measures in place aimed at reducing the spread of coronavirus.

    Read more

  • Egypt: Economic growth slows in January–March

    May 30, 2020

    The economy expanded 5.0% year-on-year in the third quarter of FY 2020 (January–March 2020), according to estimates announced by the Ministry of Planning and Development on 30 May.

    Read more

  • 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.

    Read more

More news

Search form