UPDATE: CBE keeps interest rates unchanged to ensure medium-term price stability – Economy – Business

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As a result, the overnight deposit rate, overnight lending rate and CBE main rate remain unchanged at 11.25%, 12.25% and 11.75%, respectively. .

The discount rate also remained unchanged at 11.75%.

Earlier on Thursday, President Abdel-Fattah El-Sisi issued a presidential decree appointing United Media Services Group (UMS) Chairman of the Board of Members Hassan Abdallah as Acting Governor of the Central Bank of Egypt (CBE). .

On Wednesday, President El-Sissi accepted the resignation of Amer, who chaired the CBE for seven years (2015-2022).

Price stability

The MPC attributed its decision to achieve price stability in the medium term.

“The MPC views developments emanating from the Russian-Ukrainian conflict as part of exogenous shocks that are not monetary policy related and yet may lead to transitory deviations from pre-announced target rates. Monetary policy tools are used to anchor inflation expectations, contain demand-side pressures and second-round effects emanating from supply shocks that can lead to deviations from inflation targets. Therefore, given the first-round effects of supply shocks, the high annual headline inflation rate will be temporarily tolerated against the ECB’s pre-announced target of 7% (± 2 percentage points) on average in fourth quarter of 2022, before declining thereafter. “, explained the MPC.

With regard to the labor market, the unemployment rate stabilized at 7.2% in the second quarter of 2022. The stability observed is explained by the fact that the employment and labor force figures are increasing by ‘a similar magnitude, offsetting each other.Anchor

In July 2022, annual headline urban inflation resumed its upward trend, which started in December 2021, to register 13.6%, i.e. after slowing down in June 2022 to register 13.2 %. In addition, July annual core inflation – which excludes volatile food and regulated items – registered 15.6% in July 2022, compared to 14.6% the previous month. The increase was driven by higher prices for staple foods, retail items and services. This can be mainly attributed to the seasonal impact of Eid Al-Adha, the repercussions of the Russian-Ukrainian conflict, as well as the indirect effects of the increase in the prices of petroleum products.

Globally, global economic activity continued to slow, affected by the fallout from the Russian-Ukrainian conflict, while heightened geopolitical risk in Southeast Asia increases uncertainty about the global economic outlook. In addition, despite a recent slight decline, global financial conditions remained relatively tight as major central banks continued to raise policy rates and scale back asset purchase programs in a bid to contain heightened inflationary pressures in their respective countries. At the same time, world commodity prices fell slightly after peaking following the Russian-Ukrainian conflict.

Domestic economic activity is estimated to have increased by a preliminary figure of 6.2% in the 2021/2022 financial year, compared to 3.3% in the previous financial year, the CBE said.

“This reflects stronger than expected growth. The latest available data for the first nine months of the fiscal year show that GDP growth was mainly driven by the private sector, particularly non-oil manufacturing, tourism and trade. At the same time, public sector activity was supported by natural gas extraction, the Suez Canal and public administration. Additionally, most leading indicators remained in positive territory in the second quarter of 2022,” the CBE explained.

The CBE expects growth in economic activity to occur at a slower pace but will be supported by the structural reforms planned by the government, given the negative fallout from the Russian-Ukrainian conflict, among other factors.

The MPC said it will continue to assess their impact on inflation expectations and other macroeconomic developments over the medium term.

“Achieving low and stable inflation over the medium term is a prerequisite for achieving sustainable economic growth,” MPC said.

This is the fifth meeting to be held since the start of 2022 and the fourth since the war in Ukraine began in March

The meeting is chaired by Hassan Abdallah, who was named acting governor of the CBE on Thursday, succeeding Tarek Amer.

This is the second time the CBE has held interest rates since the outbreak of the Russian-Ukrainian war.

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