The Monetary Policy Committee of the Central Bank of Egypt decided, in its meeting on Wednesday, April 28, 2021, to keep the overnight deposit and lending yield rates and the central bank's main operation rate at 8.25%, 9.25% and 8.75%, respectively. As well as keeping the credit and discount rate at 8.75%.
The annual rate of general urban inflation stabilized at 4.5% in March and February 2021, after recording 4.3% in January 2021. This stability came as a result of the increase in the annual contribution of food commodity inflation, which was limited by the decrease in the annual contribution of non-food commodity inflation. The annual rate of food commodity inflation increased in March 2021 after stabilizing in February 2021, to reflect the high contribution of fresh vegetables and fruits, in addition to basic food commodities, but to a lesser extent, in conjunction with the seasonal pattern for each. Meanwhile, non-food commodity inflation decreased supported by the relative stability of prices and the positive impact of the base period. At the same time, the annual rate of core inflation increased slightly, to 3.7% in March 2021, compared to 3.6% in February 2021.
Preliminary data indicate that the real GDP growth rate recorded 2.0% during the fourth quarter of 2020, compared to 0.7% during the third quarter of the same year. In addition, some preliminary indications point to the resumption of the gradual recovery towards the levels recorded in the pre-outbreak of the Coronavirus pandemic. At the same time, the unemployment rate stabilized at 7.2% during the fourth quarter of 2020, compared to 7.3% during the third quarter of the same year.
At the global level, economic activity continued to recover, albeit unevenly at the level of different sectors and countries, in light of the continuing impact of the spread of the Coronavirus pandemic. The recovery of global economic activity depends on the developments in the spread of the pandemic, in addition to the effective, abundant and rapid distribution of vaccines for the Corona pandemic. The favorable financial conditions that support global economic activity are expected to continue in the medium term. At the same time, global prices for foodstuffs and other primary commodities have increased, and global oil prices continue to revolve around relatively high levels compared to their levels after the spread of the Coronavirus pandemic. The increase in oil prices was driven by developments on the supply and demand side, which will affect future global price paths for oil.
In light of the foregoing, the Monetary Policy Committee decided that the basic return rates of the central bank are appropriate at the present time, and are consistent with achieving the target inflation rate of 7% (± 2 percentage points) on average during the fourth quarter of 2022 and price stability in the medium term.
The Monetary Policy Committee will closely monitor all economic developments and risk balances and will not hesitate to use all its tools to support the recovery of economic activity, provided that inflationary pressures are contained.
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