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The Monetary Policy Committee of the Central Bank of Egypt decided, at its meeting on Thursday, May 14, 2020, to keep the rates of return on deposits and loans for one night and the price of the main operation at the level of 9.25%, 10.25 % and 9.75%, respectively, as well as maintaining the price of credit and the discount at the level of 9.75%
The annual urban headline inflation rate increased to 5.9% in April 2020 from 5.1% in March 2020 and the increase is due to the negative impact of the base period as a result of the limited increase in the general price level in April 2019, in addition of the price increase in April 2020 that reflected the impact of the New Corona virus pandemic and the seasonal increase due to Ramadan. The increase in the annual inflation rate in April 2020 was driven by the increase in the annual contribution of food products, especially basic food products, which exceeded the decrease in the annual contribution of non-food products. Consequently, the annual core inflation rate increased to 2.5% in April 2020 compared to 1.9% in March 2020.
Real GDP growth continued to stabilize at 5.6% during the fourth quarter of 2019, as the increase in the contribution of the public sector limited the impact of the slowdown on the contribution of the private sector, and the increase in the contribution of consumption also limited the impact of the slowdown on the investment contribution. At the same time, the preliminary indicators showed an overall improvement in economic activity on average during January and February 2020, before reflecting a slowdown during March and April 2020. Despite this, the diversity of sources of growth in activity economic will help reduce the impact of the shock in light of stability in some sectors.
Globally, economic activity and employment levels have decreased significantly, which in turn has affected the growth prospects for global economic activity. This was reflected in the fall in world oil prices, despite a reduction in the production of the main producers.
In exceptional circumstances, and to take into account the economic and social dimension, the central bank proactively took many measures, including a package of initiatives targeting the various economic sectors, in addition to the Monetary Policy Committee that lowered basic interest rates by 300 basis points at its emergency meeting on March 16, 2020. In light of the above, the Monetary Policy Committee decided that current rates of return are currently appropriate and are consistent with the achievement of the rate of inflation target of 9% (± 3%) in the fourth quarter of 2020 and price stability in the medium term.
The Monetary Policy Committee will closely follow all economic developments and risk balances and will not hesitate to use all its tools to support the recovery of economic activity, provided that inflationary pressures are contained.
