CAIRO: The Central Bank of Egypt’s (CBE) Monetary Policy Committee (MPC) decided Thursday to cut the overnight deposit and lending rates by 50 basis points to 8.75 percent and 9.75 percent respectively, despite forecasts that rates may remain unchanged.
The rate of the CBE’s main operation and the discount rate were also slashed by 50 basis points to 9.25 percent each, according to a statement posted on the CBE’s official website.
In a previous meeting on Nov.27, the committee kept the overnight deposit rate, overnight lending rate and the rate of the CBE’s main operation at their levels that were raised on July 17 by 100 basis points each.
“Headline CPI decelerated by 1.53 percent (m/m) and 0.07 percent (m/m) in November and December, respectively. This brought the annual inflation rates to 9.09 percent in November then to 10.13 percent in December due to an unfavorable base effect,” CBE said in the statement.
The CBE attributed the monthly developments to the seasonal decline in the prices of fruits and vegetables coupled with the decline in prices of food items backed by the decrease in international prices.
“Real GDP jumped significantly in 2014/15 Q1, registering at 6.8 percent the highest annual growth rate since 2007/08 Q4. This came after 2013/14 FY real GDP growth rate recorded 2.2 percent.”
The Central Bank also noted that the expansion in the economic activity during the first quarter of 2014/15 is attributed to the continuous growth in the manufacturing sector and the expansion of tourism activities.
Also investment continued to improve for the 3rd consecutive quarter, according to the CBE, forecasting that investments in domestic mega projects such as the Suez Canal are to boost economic growth.
“Upside risks from imported inflation continued to be contained on the back of lower oil prices and the consequent revision in international food price forecast,” CBE said.