Cairo - Mubasher: The Central Bank of Egypt (CBE) has decided to maintain interest rates unchanged, according to the monetary policy statement, a move that was widely expected with developments delaying the move towards a more accommodative policy.
The Monetary Policy Committee (MPC) met on Wednesday and kept the overnight deposit rate, overnight lending rate, and the rate of the main operation at 16.75%, 17.75%, and 17.25%, respectively.
The discount rate was also kept unchanged at 17.25%
“Annual headline inflation rose to 14.2% in August 2018 from 11.4% in May 2018, while annual core inflation continued to decline for the twelfth consecutive month to record 8.5% in July 2018, before increasing slightly to 8.8% in August 2018,” the statement noted.
Upward adjustments of regulated prices as well as higher prices of fresh fruits and vegetables contributed to the widening spread between headline and core inflation since June 2018.
Annual real growth domestic product (GDP) growth stabilized in the second quarter at the 5.4% rate registered in the previous quarter, which was mainly driven by net foreign demand as well as by domestic investment.
Job creation supported the decline of the unemployment rate to 9.9% in Q2-18, the lowest rate since Q4-10, the statement added.
The MPC also decided that keeping key policy rates unchanged remains consistent with achieving the target path for headline inflation that was announced in May 2017, at 13% (±3 percent)
The effect of developments in emerging market economies on domestic inflation remained contained due to stabilization and structural policies that support improving macroeconomic fundamentals, the statement explained, noting that the MPC closely monitors all economic developments and will not hesitate to adjust its stance to achieve its mandate of price stability over the medium term.
