The Central Bank of Egypt’s (CBE) Monetary Policy Committee (MPC) holds its first meeting in 2020 on Thursday to discuss basic interest rates, a most prominent and important indicator of the trend in the local market.
The CBE revealed on Tuesday the scheduled meetings of the MPC during the current year.
According to the CBE, the MPC will hold 9 meetings, the first of which will be on Thursday, which is was originally postponed to 26 December 2019. The second meeting will be held on 20 February, then on 20 April, 14 May, 25 June, 13 August, 24 September, 12 November, and then 24 December.
The MPC held 7 meetings in 2019, during which it decided to reduce the basic interest rates at the CBE by 4.5%. The second meeting was postponed until the formation of the new committee, after reshuffling CBE’s board of directors.
The new committee consists of Governor Tarek Amer, as well as his two deputies, Gamal Negm and Rami Aboul Naga. It also includes Mohamed Omran, head of the Financial Regulatory Authority, Ashraf Al-Arabi, former Minister of Planning, and Naglaa Al-Ahwani, former Minister of International Cooperation.
The Banking Law entrusts the CBE with developing and implementing monetary policy. Accordingly, the CBE is committed, in the medium term, to achieve low inflation rates that contribute to building confidence and maintaining high rates of investment and economic growth.
The MPC makes decisions related to monetary policy, and implements those decisions through a set of tools and procedures. The MPC sets two interest rates; one for overnight deposits, and the other for lending through a Corridor System.
The overnight deposit interest rate represents the minimum interest rate for the framework, and the overnight lending interest rate represents its maximum. These two rates are the main tools for implementing monetary policy, which targets the overnight interest rate of interbank transactions. In addition, CBE uses open market operations to manage liquidity.
The MPC meeting to be held on Thursday, comes amid strong expectations in the market of keeping rates unchanged, as the core and headline inflation rates inched up on an annual basis at the end of December.