Central bank postpones monetary policy meeting to May 21

CAIRO – 1 May 2017: The Central Bank of Egypt postponed its upcoming Monetary Policy Committee (MPC) meeting, which will discuss interest rates, to Sunday, May 21. It was originally slated for May 18.

A delegation from the International Monetary Fund (IMF) is visiting Egypt from April 30 to May 11 to follow-up on the implementation of the government’s reform program. The review is essential for the IMF to disburse the second tranche of a $12 billion loan to Egypt, worth $1.2 billion.

After floating the local currency, introducing a value-added tax and slashing fuel subsidies as part of a comprehensive reform program, Cairo clinched a $12 billion extended facility loan agreement with the IMF to support the country’s ambitious reform program. Shortly after the loan’s approval, Cairo received a first tranche of $2.7 billion.

On the sidelines of the IMF-World Bank joint spring meetings, held in Washington April 21-23, IMF Middle East and Central Asia Department Director Jihad Azour hinted that Egypt should use monetary and fiscal policy instruments including interest rates to curb the soaring inflation.

However, economists argue that raising the interest rates would not be effective anymore in containing an inflation triggered by higher production cost after the float along with other reforms, not an increase in demand.