According to the institution, the measure "provides support to economic activity" affected by covid-19 and remains "compatible with price stability in the medium term".
The Central Bank of Egypt cut its main policy rates by 50 basis points. The announcement was made on November 12, 2020 by the institution’s Monetary Policy Committee (MPC).
This decision aims to support the Egyptian economy which contracted by 1.7% during the second quarter of 2020. Due to the restrictions linked to the covid-19 pandemic, Egyptian growth which was on the rise in recent years had only reached 3.6% in fiscal year 2019-2020 compared to 5.6% in the previous fiscal year.
Unlike economic growth, the level of inflation continues to rise. It reached 4.5% in October 2020 against 3.7% in September and 3.4% in August. However, the Bank indicates that it should remain below the floor of 6% which was expected by the institution for this year.
“The cut in key rates provides appropriate support for economic activity, while remaining compatible with price stability in the medium term,” the Central Bank said in its statement, adding that “annual inflation rates have continued. to reflect moderate inflationary pressures ”.
Source Ecofin Agency