The decision keeps the overnight deposit rate at 8.25%, the overnight lending rate at 9.25%, and the rate of the main operation at 8.75%
Continuing its 6-month streak, the Monetary Policy Committee (MPC) of the Central Bank of Egypt (CBE) has once again decided to keep interest rates as is, maintaining the same rates since December 2020.
The decision keeps the overnight deposit rate at 8.25%, the overnight lending rate at 9.25%, and the rate of the main operation at 8.75%. The discount rate was also kept unchanged at 8.75%.
In a statement, the CBE stated that the MPC based its decision on June’s inflation numbers, with annual inflation readings expected to continue to be affected by unfavorable base effects for the 2nd month in a row.
According to the latest numbers, annual headline urban inflation marginally increased to 4.9% in June, a 0.1% rise from May, due to an unfavorable base effect and an uptick in domestic food prices.
The small incline in June was driven by higher annual inflation of food items, which accelerated to 3.4% compared to 1.7% in May 2021, signifying the higher annual contribution of subsidized and core food items.
Annual nonfood inflation fell to 5.6% in June 2021 from 6.3% in May 2021, the lowest recorded level since June 2014, while annual core inflation increased to 3.8% in June compared to 3.4% in May.
Egypt’s GDP is expected to record a preliminary figure of 2.8% in FY 2020/2021, lower than the 3.6% in the previous fiscal year.
Sectoral growth could continue a growth streak, with Q1 2021 data displaying its positive growth due to being supported by the positive contributions of trade, construction, and communications, as well as natural gas extractions.
Egypt currently has one of the highest real interest rates in the world, supporting the country’s rebound in portfolio flows since May 2020.
