The Monetary Policy Committee (MPC) decided to raise the Central Bank of Egypt’s (CBE) deposit rate, overnight lending rate, and the rate of the main operation by 300 basis points to 16.25%, 17.25%, and 16.75%, respectively. The discount rate was also raised by 300 basis points to 16.75%.
The MPC said the move was prompted by its desire to suppress intensifying inflationary pressures and achieve the target inflation rate.
It also stated in a statement issued yesterday evening that expectations for global commodity prices have slowed compared to previous ones floated during the committee’s previous meeting.
It stated that global financial conditions have stabilized as major central banks warned of the possibility of inflation rates reaching their peak and then falling. However, several factors continue to contribute to uncertainty, including ongoing tensions between Russia and Ukraine, the impact of the conflict, and China’s decision to reduce its precautionary measures against coronavirus on the international supply chain.
On the local level, MPC initial data pointed out a recovery of economic activity in the third quarter of 2022 as the Gross Domestic Product (GDP) recorded a growth rate of 4.4 per cent compared with 3.3 per cent in the second quarter. This growth was backed by contributions from the agricultural sector, wholesale and retail trade and tourism.
MPC also stated that growth rates will continue to rise in the fourth quarter of 2022. In terms of the labour market, the unemployment rate was 7.4 per cent in the third quarter of 2022, up from 7.2 per cent in the second quarter.