According to Bloomberg, the decision leaves the North African nation with the highest inflation-adjusted interest rate of more than 50 economies
Egypt will continue to hold its interest rates, making this the seventh consecutive hold announced by the Monetary Policy Committee (MPC).
Keeping interest rates unchanged, the overnight deposit rate remains at 8.25%, overnight lending rate at 9.25%, the rate of main operations at 8.75%, and discount rate at 8.75%.
According to Bloomberg, the decision leaves the North African nation with the highest inflation-adjusted interest rate of more than 50 economies tracked by Bloomberg. That may help keep its local debt attractive to foreign investors even if Fed tapering leads advanced economies to tighten monetary policy and offer increasingly competitive yields.
Overseas investors hold around $33 billion of Egypt’s Treasury bills and bonds, an important buffer for the most populous Arab nation as tourism awaits a full recovery from the coronavirus pandemic, it continued.
Annual headline inflation rates were affected by unfavorable base effects during July 2021 and August 2021 as August 2020 and July 2020 reflected the impact of the COVID-19 outbreak and its resulting containment measures on inventory levels and consumption patterns, writes a CBE statement.
Against this background, the MPC decided that keeping policy rates unchanged remains consistent with achieving the inflation target of 7% (±2 percentage points) on average in 2022 Q4 and price stability over the medium term.
Annual headline urban inflation increased to 5.7% in August 2021 from 5.4% in July 2021, after having accelerated from 4.9% in June 2021. Meanwhile, annual core inflation slightly declined to 4.5% in August 2021 from 4.6% in July 2021, after having increased from 3.8% in June 2021.
Real GDP growth recorded a preliminary figure of 7.7% in 2021 Q2, reflecting the sustained recovery of economic activity; as it continues to gather pace and rebound from last year’s trough at negative 1.7%, writes the CBE.
Against this background, the MPC decided that keeping policy rates unchanged remains consistent with achieving the inflation target of 7% (±2 percentage points) on average in 2022 Q4 and price stability over the medium term, they explained.
Compared to the last MPC, median forecasts for Brent oil prices are broadly stable, while international prices for food and some other commodities remain at multi-year highs.
