The Central Bank of Egypt's (CBE) Monetary Policy Committee (MPC) kept overnight deposit and lending rates unchanged at 16.75 percent and 17.75 percent respectively, the CBE announced in a statement on Thursday. The rate of the CBE's main operation and the discount rate were left unchanged at 17.25 percent. "The MPC's decision to keep the CBE's key policy rates unchanged is consistent with achieving the targeted disinflation path," the statement read. "The increase in international oil prices gained momentum in April and May 2018, leading to the materialisation of an upside risk to the domestic inflation outlook," the statement added. Oil prices recorded $80 per barrel on Thursday for the first time since November 2014. "Nevertheless, the outlook remains consistent with achieving the inflation target of 13 percent (±3 percent) in 2018 Q4 and single digits thereafter," the CBE said. Egypt's annual headline inflation continued to ease in March and April, recording 13.1 percent in April, and annual core inflation continued to decline in March to 11.6 percent and remained almost unchanged in April. The headline and core annual rates in April 2018 were the lowest since May and April 2016, respectively, the CBE said on Thursday. The monthly inflation rate climbed to 1.5 percent in April from 1 percent in March. "Domestic risks surrounding the inflation outlook continue to include potential fiscal reform measures, the evolution of inflation expectations, as well as demand-side pressures," the CBE added. The government is expected to implement further fuel and electricity subsidy cuts this summer. "In addition to oil price developments, risks from the external economy continue to include the pace of tightening financial conditions," the statement read. Real GDP growth recorded 5.3 percent in December 2017 and an average of 5 percent in 2017, the highest since 2010, the CBE said. Unemployment also reached the lowest figure since December 2010, at 10.6 percent in March 2018. "The MPC closely monitors all economic developments and will not hesitate to adjust its stance to achieve its mandate of price stability over the medium term," the CBE statement read. The CBE had cut key interest rates by 100 basis points on 29 March 2018. The committee is set to meet next on 28 June.
