CBE Fixes Interest Rates On GDP Increase By 0.4% In Q2

The Central Bank of Egypt (CBE) decide to keep lending rate steady at 10.25 percent and the deposit rate at 9.25 percent. Repo rate was fixed at 9.75%and credit and discount rates at 9.5%.

Central Bank of Egypt said this decision came as gross domestic production grew by only 0.4% in the second quarter of FY 2011/2012, after a slight increase by 0.3% in the first quarter of the same year and a 4.3 percent contraction in the third quarter that followed a sharp decline in revenues of tourism, industry and construction, in addition to the economic uncertainty in Egypt after 2011’s revolution.

Consumer price index reported a monthly increase of 1.22% in March 2011, up from 0.67% increase in February 2012. Annual general inflation rate declined to 9.03% in March, down from 9.19% in February. The core inflation rate reported 1.12% in March, up from 0.52% in February due to an increase in food prices.

The political transitions in Egypt and Arab countries will continuously affect consuming and investment decisions, which will harm vital economic sectors. In addition, global economy is retreating amid the challenges facing Euro zone countries.

Accordingly, CBE’s Monetary Policy Committee considered the interest rates suitable.