Egypt central bank keeps its interest rates unchanged at 9.75 percent

Cairo, Egypt, Capital Markets in Africa — In its meeting held on September 17, 2015, the Central Bank of Egypt (CBE) Monetary Policy Committee (MPC) decided to keep the overnight deposit rate, overnight lending rate, and the rate of the CBE’s main operation unchanged at 8.75 percent, 9.75 percent, and 9.25 percent, respectively. The discount rate was also kept unchanged at 9.25 percent.

According to the statement issued by the CBE, the headline Consumer Price Index (CPI) increased by 0.63 percent (m/m) in August compared to an increase of 0.71 in July, while the annual rate decelerated to 7.88 percent in August from 8.38 percent in July, supported by a favorable base effect.

The MPC, predicted that upside risks to the inflation outlook from domestic supply shocks are largely mitigated by contained imported inflation, against the background of broad-based declines in international commodity prices.

It noted in the issued note, that the  real GDP grew by 3.0 percent (y/y) in 2014/15 Q3 to record 4.6 percent (y/y) during the first nine months of the fiscal year. This comes after real GDP growth recorded 2.2 percent (y/y) during 2013/14. The main contributors to growth during 2014/15 Q3 were the internal trade, construction, building and the real estate sectors, while the extractions sector remained weak.

The MPC anticipated that although investments in domestic mega projects are expected to contribute to economic growth, however, the downside risks and uncertainty that surround the global economy on the back of softening growth in emerging markets and challenges facing the Euro Area could pose downside risks to domestic GDP.