Central Bank of Egypt Leaves Monetary Policy Unchanged
Egypt’s Central Bank decided on April 28th, 2014, to leave the overnight deposit rate on hold at 8.25 percent for the third straight meeting, as policymakers consider upside risks to the inflation outlook to be contained.
4/28/2014 5:43:39 PM
The Central Bank also left the overnight lending rate and the rate of the CBE’s main operation unchanged at 9.25percent and 8.75 percent, respectively. The discount rate was also unchanged at 8.75 percent.
Excerpt from Central Bank of Egypt' press release:
Upside risks to the inflation outlook continue to be contained as the possibility of a sharp rebound in international food prices is unlikely in light of recent global developments.
Meanwhile, real GDP picked up slightly in 2013/2014 Q2, growing by 1.4 percent compared to the 1.04 percent recorded in the quarter ending September 2013. This brought the annual growth for the first half of 2013/2014 to a feeble 1.2 percent compared to the growth rate of 2.1 percent recorded in 2012/2013. Economic activity remained sluggish in 2013/2014 Q2 on the back of modest growth rates in most of the key sectors, namely manufacturing and construction in addition to the contraction in the tourism and petroleum sectors. In the meantime, investment levels remained low given the heightened uncertainty that faced market participants since early 2011 and the weak credit growth to the private sector. Looking ahead, downside risks that surround the global recovery on the back of challenges facing the Euro Area and the softening growth in emerging markets could pose downside risks to domestic GDP going forward.
The pronounced downside risks to domestic GDP combined with the negative output gap since 2011 will limit upside risks to the inflation outlook going forward. Given the mixed balance of risks surrounding the inflation and the GDP outlooks at this juncture, MPC judges that the current key CBE rates are appropriate.