MPC Press Release September 2022

The Monetary Policy Committee of the Central Bank of Egypt decided at its meeting on Thursday, 22 September 2022.
Maintaining the overnight deposit and lending rates and the central bank’s main transaction rate at the level of
25.11%, 25.12% and 75.11%, respectively. The credit and discount rate was also kept at 75.11%.
The Central Bank of Egypt also decided to increase the percentage of cash reserves that banks are obligated to maintain with the Central Bank
This decision will help in restricting the monetary policy pursued by the Central Bank.Globally, the outlook for economic activity has declined due to the effects of the Russia-Ukraine crisis. And at the same time,
Central banks abroad continued to restrict monetary policies by raising interest rates and reducing purchasing programmes
Relatively similar assets to contain the high inflation rates in their countries. The world prices of some basic commodities have fallen.
Oil, as a result of the decline in demand due to expectations of a global recession.
At the local level, preliminary data indicates that the real GDP recorded a growth rate of 2.3%.
During the second quarter of 2022, recording a growth rate of 6.6% during the fiscal year 2021/2022, compared to 3.3%
Detailed data for the nine months
during the previous fiscal year. The growth came in real GDP.Primarily driven by the contribution of the private sector, in particular the first contribution of each of the fiscal year 2021/2022
Non-oil manufacturing industries, tourism and trade. At the same time, growth in the public sector was driven by
With the contribution of the natural gas extraction sector, the Suez Canal and the general government. Moreover, some
Preliminary indicators record positive growth rates during the third quarter of 2022. Economic activity is expected to grow
Than expected to the state of uncertainty and negative repercussions at the global level. than before. This is partly due to a slower pace.Regarding the labor market, the unemployment rate stabilized at 2.7% during the second quarter of 2022. This is due to the high
The number of employed people and the labor force are the same, to limit the contribution of each other.
The annual general urban inflation rate rose to 6.14% in August 2022 from a rate of 6.13% in July
2022. As well as record the annual rate of basic inflation – which is calculated by excluding the group of vegetables and fruits
Fresh as well as goods and services priced administratively – 7.16% in August 2022 from 6.15% in July 2022.
The rise in the annual rate of inflation since the beginning of 2022 is mainly due to supply-side shocks
Especially the rise in world prices of goods. Despite the high annual rates of inflation, the monthly rates.Lower percentages were recorded compared to the highest levels recorded during the months of March and April 2022.
In light of the foregoing, the Monetary Policy Committee considers that the current basic interest rates with an increase in the cash reserve ratio that
Banks are committed to maintaining them with the Central Bank of Egypt consistent with achieving the objective of price stability in the medium term.
The Committee will continue to assess the impact of its decisions on inflation expectations and macroeconomic developments in the medium term, taking into account the
Taking into account that the impact of its previous decisions to raise the basic interest rates by 300 basis points during 2022 is still transmitted
to the economy. As for the central bank’s target inflation rate, which is ±7 (2% percentage point) on average.During the fourth quarter of 2022, it is expected, temporarily, that inflation rates will rise. The central bank confirms
His commitment to achieving low and stable inflation rates over the medium term, which is a prerequisite for achieving sustainable growth rates.
The Committee will closely follow all global and local economic developments and will not hesitate to use all its monetary tools
To achieve the goal of price stability in the medium term. The Committee also emphasizes that the current interest rates depend mainly on
on expected inflation rates, not prevailing rates.