Central bank leaves key interest rates unchanged
The central bank’s Monetary Policy Committee left key interest rates unchanged at its Thursday meeting. The move was widely expected. The overnight deposit and lending rates remained unchanged at 16.75% and 17.75%, respectively, with the main operation rate also stable at 17.25%. The decision was “consistent with the targeted disinflation path,” the CBE said in a statement, which explains that it means to counter a temporary rise in inflation levels that is expected to follow the most recent hike in energy prices.
The central bank sees inflation falling into the single-digits “after the temporary effect of supply shocks dissipates.” Inflation levels in May rose at their slowest pace in two years, with annual headline inflation coming in at 11.4%, down from 13.1%, while monthly headline inflation dropped to 0.2% from 1.5% a month before. “[The CBE] want to assess the inflationary impact of the recent increase in fuel and electricity prices before easing policy further,” said Bloomberg Economics’ Ziad Daoud tells Bloomberg.