Why did Egypt lower interest rates? .. 4 reasons for the decision

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The bank's Monetary Policy Committee said in a statement that it had decided to lower the overnight deposit rate to 14.25 percent from 15.75 percent and the overnight lending rate to 15.25 percent from 16.75 percent.

The MPC statement said that the decline in the annual rate of core and core inflation remained "to 8.7 percent and 5.9 percent in July 2019, respectively, the lowest rate in nearly four years, despite the fiscal control measures of the recently implemented. This has covered the costs of most petroleum products. "

The statement of the policy committee attributed the low interest rates to four reasons, the first of which included inflationary pressure, which was reflected in the relatively low monthly inflation rates, as well as the positive impact of the base year, as the fiscal consolidation measures of the recently applied condition was lower than the previous year & # 39 ;.

“ At the same time, preliminary data indicate a slight increase in real GDP growth to 5.7 percent in the second quarter of 2019 and 5.6 percent in the fiscal year. 2018/2019, The highest percentage since the 2007/08 financial year. "

The committee also decided to lower interest rates for a second reason: the fall in the unemployment rate, which was 7.5 percent in the second quarter of 2019, which means a decrease of around 6 percentage points compared to its peak of 13.4 percent in the fourth quarter of 2013.".

The MPC statement also cited a third reason for the continued "slowdown in the global economic growth rate and the negative impact of trade tensions on growth prospects, which contributed to facilitating the global financial situation by leveraging the base interest rates of some central banks to lower."

In addition, the Committee mentioned the fourth reason for the recent fall in "world oil prices, which remains vulnerable to volatility" due to regional risks and other supply-side factors.".

"In the light of continued control of inflationary pressures and all domestic and international developments, the Monetary Policy Committee has decided to reduce the central yield of the central bank by 150 basis points. This decision is consistent with achieving the intended inflation rate of 9 percent in the fourth quarter of 2020 and price stability, in the medium term.

The Committee stressed that it will continue to "take decisions based on expected inflation in the future, not on prevailing inflation. Therefore, the pace and extent of future adjustments to the basic return at the Central Bank will continue to rely on consistency of inflation expectations with target rates, to ensure the continuity of the rate Medium-term price stability objective.

The Committee noted that it will continue to "follow up on all economic developments" and not hesitate "to change its policy to maintain monetary stability".

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The bank's Monetary Policy Committee said in a statement that it had decided to lower the overnight deposit rate to 14.25 percent from 15.75 percent and the overnight lending rate to 15.25 percent from 16.75 percent.

The MPC statement said that the decline in the annual rate of core and core inflation remained "to 8.7 percent and 5.9 percent in July 2019, respectively, the lowest rate in nearly four years, despite the fiscal control measures of the recently implemented. This has covered the costs of most petroleum products. "

The statement of the policy committee attributed the low interest rates to four reasons, the first of which included inflationary pressure, which was reflected in the relatively low monthly inflation rates, as well as the positive impact of the base year, as the fiscal consolidation measures of the recently applied condition was lower than the previous year & # 39 ;.

“ At the same time, preliminary data indicate a slight increase in real GDP growth to 5.7 percent in the second quarter of 2019 and 5.6 percent in the fiscal year. 2018/2019, The highest percentage since the 2007/08 financial year. "

The committee also decided to lower interest rates for a second reason: the fall in the unemployment rate, which was 7.5 percent in the second quarter of 2019, which means a decrease of around 6 percentage points compared to its peak of 13.4 percent in the fourth quarter of 2013.".

The MPC statement also cited a third reason for the continuing "slowdown in global economic growth rate and the negative impact of trade tensions on growth prospects, which has helped facilitate the global financial situation by leveraging the base interest rates of some central banks to lower."

In addition, the Committee mentioned the fourth reason for the recent fall in "world oil prices, which remains vulnerable to volatility" due to regional risks and other supply-side factors.".

"In the light of continued control of inflationary pressures and all domestic and international developments, the Monetary Policy Committee has decided to lower the central bank's interest rates by 150 basis points. In the medium term.

The Committee stressed that it will continue to "take decisions based on expected inflation in the future, not on prevailing inflation. Therefore, the pace and extent of future adjustments to the basic return at the Central Bank will continue to rely on consistency of inflation expectations with target rates, to ensure the continuity of the rate Medium-term price stability objective.

The Committee noted that it will continue to "follow up on all economic developments" and not hesitate "to change its policy to maintain monetary stability".

Egypt