The Central Bank of Egypt’s (CBE) Monetary Policy Committee (MPC) has decided on Thursday to cut interest rates by 50 basis points, in its first meeting in 2015.
CBE explained that it has reduced its overnight deposit rate, overnight lending rate and the rate of CBE’s main operation to 8.75%, 9.75% and 9.25% respectively. The discount rate was also cut by 50 basis points to 9.25%.
The cut was attributed to a decline in headline consumer price index (CPI) by 1.53% in November and 0.07% in December, which the CBE said was to bring annual inflation rates to 9.09% in November, and then to 10.13% in December.
Meanwhile, core CPI inched up by 0.3% in December after declining by 0.15% in November, the bank said. “Upside risks from imported inflation continue to be contained on the back of lower oil prices and the consequent revision in international food price forecast,” the CBE added.
The statement discussed that real GDP has jumped in Q1 FY 2014/15, registering 6.8%, the highest annual growth rate since Q4 FY 2007/08, thanks to growth in the manufacturing sector and expansion of tourism activities after several quarters of contraction.
“So, in light of recent global developments and the reassessment of risks surrounding the inflation outlook and domestic GDP, the MPC decided to cut key CBE rates,” it added.