Will Egypt continue its monetary easing cycle after unscheduled 3%-interest rate-cut? – Egypttoday

Will Egypt continue its monetary easing cycle after unscheduled 3%-interest rate-cut? – Egypttoday

As an exceptional decision, the MPC of CBE decided, on Mar. 16, to cut the overnight deposit rate, the overnight lending rate, and the rate of the main operation in an emergency meeting by 3 percent or 300 basis points.. Upon the decision, the overnight deposit rate, the overnight lending rate, and the rate of the main operation are cut to reach 9.25 percent, 10.25 percent, and 9.75 percent, respectively.. Credit and discount rates are now at 9.75 percent from 12.75 percent.. MPC commented then that reducing the rates was taken as an exceptional measure, which contributes to supporting economic activity in all sectors, taking into account the future expectations and consistency of inflation with achieving the target inflation rate of ± 9 percent (± 3 percent) during the fourth quarter of 2020.. To clarify, Egypt targets an inflation rate of 10.5 percent in fiscal year of 2019/2020 and was targeting 13 percent in 2018/2019 budget while if the crisis continued until December 2020, inflation rate is expected to increase to 9.8 percent.. "With central banks globally loosening policy further since then and inflation pressures in Egypt under control, the CBE is likely to step up its policy support with