The Central Bank of Egypt left key interest rates on hold last Thursday, citing global monetary policy tightening, trade wars and volatility in the oil market. The bank’s monetary policy committee left the overnight deposit and lending rates at 16.75% and 17.75%, respectively, and also left on hold its main operation and discount rates at 17.25%, the CBE said in a statement (pdf). Economists surveyed in our Enterprise poll ahead of the meeting had suggested that the MPC would leave rates on hold to help maintain foreign appetite for Egyptian treasuries, among other factors.

Central bank sets new, lower inflation target: To ‘safeguard’ macroeconomic stability, the CBE said it’s looking at an inflation target of 9% (±3 percent) on average for 4Q2020, down from 13% (±3 percent) in 4Q2018. Headline inflation dropped to 15.7% in November from 17.7% the previous month, falling back into the government’s targeted range of 13% (±3%). A recent decision to scrap a discounted customs exchange rate for non-essential goods may send inflation back up in coming months though, as could subsidy cuts expected by the middle of 2019 as the current fiscal year ends or the next begins.

(Speaking of which: Egypt will leave the customs exchange rate for essential goods unchanged at EGP 16 for January, the Finance Ministry has said. Customs on non-essential and luxury goods will be calculated at a rate of EGP 17.9739. Ahram Online has the story.)

GDP, unemployment stable: Real GDP growth stabilized at 5.4% in 2Q2018, the first flat quarter after consecutive quarters of growth. Flat growth came as private domestic demand and net exports declined, according to the statement. The unemployment rate also stabilized at 10% in 3Q2018.