Thursday, August 25, 2011

Central Bank of Egypt Holds Interest Rate at 8.25%

The Central Bank of Egypt held its overnight deposit rate unchanged at 8.25%, and the overnight lending rate at 9.75%, while also holding the discount rate at 8.50% and the 7-day repo rate at 9.25%.  The Bank said: "It is important to note that while a marked decline in economic activity was expected, the magnitude is larger than anticipated at the outset of the revolution." The Bank also said: "the slowdown in economic growth should limit upside risks to the inflation outlook. Given the balance of risks on the inflation and GDP outlooks and the increased uncertainty at this juncture, the MPC judges that the current key CBE rates are appropriate." 

Previously the Bank also maintained its interest rates unchanged when it announced policy settings in June this year.  Egypt reported annual consumer price inflation of 10.4% in July, compared to 11.8% in June, 11.9% in May, and down from 12.1% in April.  Core inflation was 8.71% in July, versus 8.94% in June and 8.81% in May.  The toll of the revolution was seen as Egypt's gross national product contracted by 4.2% year-on-year in the third quarter of the 2011/2012 fiscal year and investment fell 26% due to uncertainty arising from the political upheaval.


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