Egypt has been taking bold monetary policy actions to confront economic challenges: CBE Governor

The CBE governor made these statements to Ahram Online on Thursday on the sidelines of his participation in the ongoing IMF’s and the World Bank Group’s (WBG)’s annual spring meetings in Washington DC.

“Egypt has taken huge actions over the past few years to mitigate the impacts of the COVID-19 and the repercussions of the Russian-Ukrainian conflict on the Egyptian economy, and we are ready to do more,” Abdallah said.

The CBE's primary focus in the current period is curbing inflation. We are targeting a 7 percent (±2 percent) inflation rate by the fourth quarter of 2026, he noted.

Egypt's headline inflation has remained in double digits since the start of the Ukrainian conflict in the spring of 2022, jumping to a five-year high 32 percent in March of this year.

However, core inflation rate fell below 40 percent in March, according to the latest figures released by the CBE.

"The CBE has been analysing various models to understand the drivers behind our inflation figures. Our analysis shows that our inflation figures were not only driven by commodity prices but also by supply-side issues such recent backlogs in imports which resulted from previous policy regulations,” Abdallah explained.

“The CBE has not and will not hesitate to use monetary policy to tackle inflation,” he stressed.

“Since March 2022, Egypt has already raised key interest rates by a significant 1000 basis points (bps) and devalued our local currency by almost the same ratio, which was a significant step," the CBE governor noted.

Egypt has devalued the Egyptian pound against the US dollar on three different occasions since the start of the war in Ukraine.

Currently, the US dollar is trading at around 31 EGP, which is almost twice the 16 EGP figure prior to the outbreak of the war.