Monday, March 16, 2020

Egypt cuts rates 300 bps to support economy from virus

     Egypt's central bank cut its benchmark interest rates by 300 basis points to support economic activity given the current "challenging external environment" while the outlook for inflation remains consistent with reaching the inflation target.
     The Central Bank of Egypt (CBE) cuts its overnight deposit rate, the overnight lending rate, the rate on the main operation and the discount rate to 9.25 percent, 10.25 percent, 9.75 percent and 9.75 percent, respectively.
      The rate cut, taken at an unscheduled meeting by the monetary policy committee, is the first by CBE since November 2019 when it paused after cutting rates six times and by a total of 650 basis points since February 2018.
      Including today's rate cut, CBE has now cut its rate by 950 basis points in two years.
      Egypt's inflation rate eased to 5.3 percent in February from 7.2 percent in January, and CBE targets inflation of 9.0 percent, plus/minus 3 percentage points by the fourth quarter of 2020.

      The Central Bank of Egypt issued the following statement:

"In light of the recent global developments following the COVID-19 outbreak globally, the Monetary Policy Committee (MPC) decided in an unscheduled meeting held on March 16, 2020 to cut the Central Bank of Egypt’s (CBE) overnight deposit rate, overnight lending rate, and the rate of the main operation by 300 basis points to 9.25 percent, 10.25 percent, and 9.75 percent, respectively. The discount rate was also cut by 300 basis points to 9.75 percent.

The MPCs preemptive decision provides appropriate support to domestic economic activity given the current challenging external environment, while the inflation outlook remains consistent with achieving the inflation target of 9 percent (±3 percentage points) in 2020 Q4.

The MPC will continue to closely monitor all economic developments and will not hesitate to adjust its stance to achieve its price stability mandate over the medium term."


Post a Comment