Mpc press release june25 2020
بنك مصر
June 25, 2020
The Monetary Policy Committee (MPC) decided to keep the Central Bank of Egypt’s (CBE)
overnight deposit rate, overnight lending rate, and the rate of the main operation unchanged
at 9.25 percent, 10.25 percent, and 9.75 percent, respectively. The discount rate was also kept
unchanged at 9.75 percent.
Annual headline urban inflation declined to 4.7 percent in May 2020 from 5.9 percent in April
2020, supported by muted inflationary pressures as well as favorable base effects where monthly
headline inflation recorded zero in May 2020 compared to 1.1 percent in May 2019. The decline
of annual headline inflation was mainly driven by lower annual food contribution, supported by
favorable base effects stemming mainly from Ramadan and Eid-Al-Fitr being in May in 2019
compared to April and May in 2020, as well as lower annual non-food contribution by a lesser
extent as the monthly increases in non-food items were weaker compared to previous year.
Meanwhile, annual core inflation declined to 1.5 percent in May 2020 from 2.5 percent in April
2020, the lowest rate on record.
Real GDP growth recorded a preliminary figure of 5.0 percent in 2020 Q1 as expected, down from
5.6 percent in 2019 Q4, as economic activity in the month of March 2020 was partially affected
by the impact of COVID-19 and the resulting containment measures. Additionally, the
unemployment rate recorded 9.2 percent in April 2020, compared to 7.7 and 8.0 percent in 2020
Q1 and 2019 Q4, respectively. Nevertheless, the recently announced gradual easing of lockdown
measures is expected to support the recovery of economic activity.
Globally, economic activity and employment have deteriorated significantly, which was also
reflected in the weakness of international oil prices, despite production cuts by major producers.
Meanwhile, global financial conditions have improved despite the present uncertainty.
In light of the above, and given the preemptive measures taken by the Central Bank of Egypt,
including the reduction of 300 basis points during the unscheduled MPC meeting on March 16,
2020, the MPC decided that keeping key policy rates unchanged remains consistent with
achieving the inflation target of 9 percent (±3 percentage points) in 2020 Q4 and price stability
over the medium term.
The MPC closely monitors all economic developments and will not hesitate to utilize all available
tools to support the recovery of economic activity, within its price stability mandate.