Egypt grapples with economic decisions amid high inflation rates
The Monetary Policy Committee of the Central Bank of Egypt decided to hold key interest rates for the fifth consecutive quarter, which raised questions about the government's ability to lower the high inflation rate.
CAIRO — The Monetary Policy Committee of the Central Bank of Egypt (CBE) decided Nov. 15 to leave key interest rates steady, keeping the deposit rate at 16.75% and the lending rate at 17.75% for the fifth consecutive quarter amid a rising inflation rate that stood at 17.7% in October, compared to 16% in September.
This raised questions about the bank’s ability to reach the target inflation rate of 13% (± 3%) during the fourth quarter of 2018.
The CBE acknowledged the increasing risks resulting from a higher-than-forecast increase in the prices of some fresh commodities such as potatoes and tomatoes. However, it said that its restrictive monetary policy has managed to contain core inflationary pressures, allowing the annual core inflation rate to continue to fall to an average of 8.7% between July and October 2018.
The CBE said that “current policy rates remain in line with achieving single-digit inflation as soon as the effects of fiscal consolidation measures dissipate.”
