The Central Bank of Egypt (CBE) also adjusted its inflation target to a range of 7% (+/- 2%) by 4Q2022, from a previous target range of 9% (+/- 3%), it said.
Inflation has been muted for the better part of 2020, exceeding the lower 6% band of the CBE’s target range only once in January. The annual headline figure, however, accelerated to 5.7% in November from 4.6% in October.
The CBE said that there will be continued use of monetary policy tools to control inflation expectations, in addition to containing inflationary pressures from the demand side and the secondary effects of supply shocks.
This may lead to inflation deviating away from target rates, which the CBE pointed out is the result of factors outside the scope of monetary policy influence.
Inflation could increase in 2021 due to “unfavorable base effects related to the normalization of monthly inflation rates,” but is unlikely to stray away from the 7% (+/- 2%) by 4Q2022, Bloomberg quoted Pharos’ head of research Radwa El Swaify as saying.
