Cityscape in Egypt

Egypt Monetary Policy April 2020

Egypt: Central Bank urgently acts to mitigate coronavirus risks

At its scheduled monetary policy meeting on 2 April, the Central Bank of Egypt (CBE) left all interest rates unchanged, including the closely-watched overnight deposit rate, at 9.25%. This decision came on the heels of the CBE’s emergency monetary policy meeting on 16 March, when it cut all interest rates by 300 basis points due to the spread of coronavirus and related containment measures, which are hampering economic activity. The CBE said its decision to cut rates would also 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, announcing measures that include lowering 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%; launching a new debt relief initiative for individuals at risk of default; permitting the delay of most loan repayments for six months; and launching an EGP 20 billion equity purchasing program.

Regarding the outlook, the CBE said it will closely monitor “all economic developments and will not hesitate utilize all available tools to support the recovery of economic activity”. The CBE’s next scheduled monetary policy meeting is set for 14 May.

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