Cairo – Mubasher: The Central Bank of Egypt (CBE) has decided to decrease interest rates by 1%, according to an official statement released on Thursday.

The Monetary Policy Committee (MPC) reduced overnight deposit rate, overnight lending rate, and the rate of the main operation by 100 basis points to 15.75%, 16.75%, and 16.25%, respectively.

The MPC also cut the discount rate by 100 basis points to 16.25%, the CBE added.

Moreover, the CBE reported that Egypt’s headline and core inflation increased to 12.7% and 8.6%, respectively, during January.

The growth of the real gross domestic product (GDP) levelled up 5.5% in the fourth quarter of 2018, compared to 5.3% in the third quarter.

The unemployment rate went down to 8.9% from 10%, marking its lowest level since December 2010, the CBE’s data showed.

“The expansion of global economic activity weakened, and the tightening of financial conditions eased, while trade tensions continued to weigh on the global outlook. International oil prices recently stabilised, yet remain subject to volatility due to potential supply-side factors,” the CBE said.

The Egyptian finance ministry is currently targeting a 2% GDP surplus in the fiscal year 2019/2019, compared to a 0.1% GDP surplus in the year before.

The MPC reduced key policy rates by 100 basis points, as factors behind the inflation weakened, the CBE’s report said.

“This remains consistent with tight real monetary conditions and with achieving the inflation target of 9% (±3%) in 2020 Q4 and price stability over the medium term.”

The MPC concluded the report by stressing that it was paying close attention to all economic developments, while ready to intervene at any time to ensure monetary stability.

The EGP exchange rate grew from 4 to 7 piasters against the USD on Thursday.

The EGP had seen a sudden jump against the greenback two weeks ago, exceeding 30 piasters, the first remarkable rise at Egyptian banks since May 2018.

The Central Bank of Egypt’s (CBE) governor Tarek Amer previously told Bloomberg News that the USD/EGP exchange rate would see further volatility over the coming days, following the shutdown of the system allowing foreign investors to repatriate dollars.