CENTRAL BANK OF EGYPT CUTS INTEREST RATE
The Central Bank of Egypt (CBE) announced that the Monetary Policy Committee (MPC) has decided to cut interest rates by 100 basis points, its third consecutive cut and the fourth in 2019. Overnight deposit and overnight lending declined to 12.25% and 13.25% respectively.
From 2018, CBE started to cut interest rates. Average overnight EGP interbank rate has been cut several times in total by 650 basis points up to November 2019 with more expected cuts in the future to reach inflation targets.
As per the CBE monetary policy recent report, the inflation outlook remain consistent with the targeted disinflation path of 9% (±3%) inflation target for 2020 Q4 down from the 13% (±3%) inflation target for 2018 Q4 which has been successfully achieved.
Post currency devaluation in 2016, Central Bank of Egypt (CBE) hiked interest rates several times in total of 700 basis points as a monetary tool to combat inflation. Average overnight EGP interbank deposit rate skyrocketed to 18.75% while 3 months treasury bills recorded an average of 18%. An exceptionally high returns that has driven massive funds to the banking sector to take benefit of such attractive rates. Analysts believe that new cuts will help to boost the real estate sector, as investors will find the sector more appealing.