The Governor of the Central Bank of Egypt (CBE) Hassan Abdalla, will review Egypt’s monetary policies in light of global developments, on Sunday, during the third session on the first day of the Egyptian Economic Conference.
This session will discuss the features of the current global inflation problem, the repercussions of the Russian-Ukrainian crisis on inflation, and the policies and measures taken by monetary policymakers around the world to curb inflation.
It will also discuss the monetary policy tightening in developed markets and their repercussions, and the efforts and measures taken by the Egyptian state to reduce the effects of high prices.
Moreover, the session will tackle the practical solutions in terms of economic policies to deal with the challenges imposed by these economic crises to enhance the effectiveness of the inflation targeting policy.
The CBE Governor will shed light on the measures and monetary policy decisions taken by the bank to curb inflation since March 2022.
A research paper that will be presented at the conference revealed that Egypt witnessed several inflationary waves, most notably the inflationary wave in 2016 that accompanied the implementation of the national economic reform program, which included the first step of liberalizing the exchange rate.
It indicated that the package of monetary measures and policies adopted by CBE, in addition to the reform policies adopted by the state at the time, succeeded in reducing inflation rates to single digits before another inflationary wave took place as a result of the Russia-Ukraine war.
It said that in the wake of the repercussions of that crisis, inflation rates in Egypt accelerated significantly; because of the disruption of food and energy supplies from Russia and Ukraine, especially since Egypt is the largest importer of wheat in the world.
According to the paper, the supply shocks resulting from the Russian-Ukrainian crisis, and its ensuing repercussions on the exchange rate movement, led to an increase in the possibility of the inflation rate exceeding its target rate in the fourth quarter of 2022.
The research paper pointed out that CBE has been using all of its tools to reduce inflationary pressures, such as raising the bank’s basic interest rates by 300 basis points cumulatively since March 2022.
CBE has also decided to increase the interest rate from 14% to 18%. It said that the MPC closely follows all global and local economic developments and will not hesitate to use all its monetary tools to achieve the target price.
