CBE cuts interest rates by 100 bps
Friday، 15 February 2019 - 01:19 PM
The Central Bank of Egypt (CBE) decided Thursday 14/02/2019 to cut the interest rates by a percent point.
The Monetary Policy Committee (MPC) cut the overnight deposit rate, and lending rates, and the rate of the main operation by 100 basis points to 15.75 percent, 16.75 percent, and 16.25 percent, respectively. The discount rate was also cut by 100 basis points to 16.25 percent.
In its statement, the CBE said the headline and core inflation rose to 12.7 percent and 8.6 percent in January 2019, respectively, due to unfavorable base effects.
This comes after headline inflation declined to 12.0 percent in December 2018 due to the reversal of the transitory supply shock related to select vegetables.
As a result, the CBE’s first inflation target of 13 percent (±3 percent) for 2018 Q4 that was announced in May 2017 has been achieved.
Real GDP growth increased slightly to 5.5 percent in 2018 Q4 from 5.3 percent in 2018 Q3, while the unemployment rate declined to 8.9 percent from 10.0 percent, registering its lowest level since December 2010. Preliminary data for 2018 Q3 indicate that net external demand continued to support economic activity while private domestic demand remained contained.
The Ministry of Finance is targeting to achieve a primary surplus of 2.0 percent of GDP in fiscal year 2018/19, up from a preliminary 0.1 percent in the previous year, and to maintain this surplus thereafter.