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Monetary Policy
  • What specific items are excluded from the headline index to compute the CBE's core inflation?

    ​The items excluded from the core measure are:


    i. Items with prices that are regulated by the government. While there is no official list of regulated items within the CPI basket, a thorough study carried out by the Monetary Policy Department at the CBE of historical developments in CPI components, shows that 19.4 percent of the CPI basket is regulated.  

    ii. Food items with prices which are inherently volatile since their supply largely depends on weather and harvest conditions, namely fruits and vegetables. They represent 8.8 percent of the CPI basket.​

  • How do other central banks construct their measures of core inflation based on the exclusion method?

    ​Most central banks, particularly those that adopt inflation targeting as a monetary policy regime, construct their own core inflation measures to monitor underlying inflationary pressures. See the table below.​


  • How often does the MPC meet?

    The MPC convenes on Thursday every six weeks. The annual schedule of the MPC meetings is posted on the CBE’s web-page at Monetary Policy > Monetary Policy Decisions > MPC Meeting Schedule​

  • What is the CBE's Monetary Policy Objective?

    Law No. 88 of 2003 of the "Central Bank, Banking Sector and Monetary System" entrusts the Central Bank of Egypt (CBE) with the formulation and implementation of monetary policy, with price stability being the primary and overriding objective. The CBE is committed to achieving, over the medium term, low rates of inflation which it believes are essential for maintaining confidence and for sustaining high rates of investment and economic growth. The Government’s commitment to fiscal discipline is important to achieve this objective.

  • What is the CBE doing in the transition until a full-fledged inflation targeting regime is formally adopted?

    The CBE intends to adopt a full-fledged inflation targeting regime once the fundamental prerequisites are met. Towards that end, the CBE has achieved the following:
    • Moving from a quantitative operational target (excess reserves) to a price target (overnight inter-bank rate), and launching a Corridor system in June 2005.
    • Issuing CBE instruments for the first time in August 2005 as the primary instruments for liquidity management through open market operations.
    • Enhancing the role of monetary policy operations to absorb or inject liquidity in the market through a publicly announced auction schedule.
    • Developing a semi-structural model, accounting for inflation expectations and a proactive interest rate policy, to forecast inflation.
    • Devising core inflation measures.
    • Activating the role of the Monetary Policy Unit (MPU), which provides objective monetary policy analysis, assessment and communication through its research and other functions.
    In the transition period, the CBE meets its inflation objectives by steering short term interest rates, keeping in view the developments in credit and money supply, as well as a host of other factors which may influence the underlying rate of inflation. The CBE strongly believes that real negative interest rates are inconsistent with the ongoing effort to reduce inflation rates and hence will continue to maintain positive real interest rates.

  • What is the Interest Rate Corridor?

    ​On June 2, 2005 the CBE introduced an interest rate corridor, two standing facilities, the overnight lending and the overnight deposit facility. The interest rates on the two standing facilities, the overnight lending and the overnight deposit rates, define the ceiling and floor of the corridor, respectively. By setting the rates on the standing facilities, the MPC determines the corridor within which the overnight rate can fluctuate. Effectively, steering the overnight inter-bank rate within this corridor is the operational target of the CBE.​

  • What are the merits of the Corridor?

    ​Since the corridor was introduced in June 2005, volatility in the overnight inter-bank rate declined significantly.

  • Who decides on the Corridor?

    ​The Monetary Policy Committee (MPC) decides on the corridor rates.​

  • What is the Monetary Policy Committee (MPC)?

    ​Monetary policy decisions are taken by the CBE’s Monetary Policy Committee (MPC), which consists of seven members comprising of the Governor of the CBE, the two Deputy Governors, and four members of the Board of Directors.​

  • How does the MPC decide on the interest rate?

    ​The MPU prepares briefing material for the MPC ahead of each meeting. This material is analytical in content and focuses on both domestic and international developments. On the domestic front, the following variables are monitored: inflation, interest rates, monetary and credit developments, asset prices, and the real sector. On the external side, the following variables are examined closely, global growth, and global interest rates including the outlook.​

  • Does the MPC justify its policy actions?

    ​Yes, the CBE publishes a press release after each MPC. It is accessible at "Monetary policy>Monetary Policy Decisions>MPC Press Releases"​

  • What is meant by the consumer price index (CPI)?

    ​It is a price index, published by the Central Agency for Public Mobilization and Statistics (CAPMAS) every month on www.capmas.gov.eg, capturing weighted price movements of consumer goods and services which constitute a representative "consumption basket" purchased by households. The weights in the basket reflect the relative importance of the goods and services in the household consumption basket based on the Household Expenditure Survey, which is carried out by CAPMAS every five years. This index is commonly referred to as the headline CPI.​

  •  What is meant by headline CPI inflation?

    ​It is a general increase in the price level of consumer goods and services contained in the household consumption basket over time. While the annual inflation rate captures the inflation story over the whole year, the monthly inflation rate contains the most recent developments.​

  • What is meant by core CPI inflation? And how is it different from the headline CPI inflation?

    ​Core CPI is a variant of the headline CPI that excludes the impact of temporary price shocks on inflation that could result for various reasons, including weather conditions, supply disruptions or infrequent resetting of prices by the government.​

  • Does the core inflation measure replace the headline measure?

    ​No, the core measure is derived from the headline and is used as a complementary indictor, mainly to distinguish the underlying trend of the inflation rate from its transitory movements. Therefore, core inflation should not, in any way, be regarded as a substitute for the headline inflation.​

  • Why use core inflation measure?

    ​Temporary and sudden movements in the prices of some CPI components cause the headline inflation rate to experience sharp fluctuations. The volatility caused by temporary price shocks can make it difficult for policymakers to accurately distinguish between price changes that are likely to be persistent which, in turn, have implications for future inflation trends, and those which are temporary. In other words, the core measure provides a mean by which the monetary authority can separate the ‘noise’ and short-run fluctuations in the incoming data from the more persistent trend which provides ‘signals’ about current and future inflation​

  • Why publish core inflation measure?

    ​By timely communicating the core inflation measure, the CBE aims to improve the public's understanding of the inflation dynamics. This is expected to reduce the pass-through of temporary price shocks to inflation expectations and, in turn, minimize the variability in inflation​

  • What are the methods of computing core inflation?

    ​Most estimates of core inflation rely on some sort of transformation of the actual price data. Broadly speaking, there are two common ways of obtaining a measure of core inflation. One approach, the exclusion method, excludes nominated items from the CPI basket which display perverse behavior or are prone to exceptional or non-representative price movements. An alternative approach, the statistical method, is to exclude all extreme individual price movements on a monthly basis regardless of the source.​

  •  How does the CBE calculate core inflation?

    ​Similar to many other central banks (see last question), the published core inflation measure is based on the exclusion method because it is straight-forward, easy to understand by analysts and the general public and could be easily replicated outside the central bank. 

    Core inflation measures based on the exclusion method remove the direct effect of price movements in those items that tend to exhibit undue volatility and are often not reflective of the underlying or persistent inflation pressures in the economy. The second-round effects, however, that these items' price movements have on the other components within the CPI basket are part of the underlying inflation pressures in the economy and hence are not excluded. Therefore, excluding one-off price changes provides a better picture of existing underlying inflation pressures.​

  • How to calculate the Duration in the Funds input file?

    ​Assuming that the Fund holds a bond maturing in 5 years, the bond pays 10% annual coupon every 6 month.

    The current yield to maturity at the market is 8%.

    1st Row: Time in years (T) is the time when the bond's payment is due. For example, if the bond is supposed to pay a coupon of 5 pounds in 6 months, so the respective time for that is 0.5 years, if the bond is supposed to pay a coupon of 5 pounds in 12 month then time is 1 and so forth.

    2nd Row: Cash Flow (CF) is the expected payments that will be paid. For example, every 6 month the bond will be paying 5 pounds as a coupon except the last year, the bond will pay 5 pounds coupon plus 100 pounds the face value of the bond.

    3rd Row: Present Value PV(CFt) the value of the coupons and principle that will be paid in the Future as of Today. For example, the bond will pay 5 pounds in 6 month, these 5 pounds worth 4.808 as of today using the following equation:

    Coupon .

    [(1+ (Yield to Maturity / Number of Coupons per Year)) ^ (Time in Year * Number of Coupons per Year)]

    So Present value for the first coupon = 5 / [(1 + (8%/2) ^ (.5*2)] = 4.8076 ~ 4.808

    4th Row: Market Price the total of the present value calculated in 3rd row Present Value

    5th Row: Time * PV(CFt) the multiplication of present value of the cash flow 3rd Row and respective time 1st Row. For example, for the first 6 month the expected value is 4.808 * .5 yrs = 2.404

    6th Row: Time * PV(CFt) / Market Price value in the 5th row by the Market Value from 4th row. For example, in the first 6 month the value = 2.404 / 108.111 = 0.022

    7th Row: _and_#8721; [ Time * PV(CFt) / MKT Price ] is the total of values in 6th Row.

    8th Row: _and_#8721; [ Time * PV(CFt) / MKT Price ] value in the 7th row divided by

    (1 + (Yield to Maturity/Number of Coupons per Year). For example, the value = 4.095 / (1 + 8% / 2 ) = 3.938 or DURATION ​

  • Why is the Bank's Abbreviation on the DMMS different than the commonly used one?

    ​The banks' abbreviations available on the DMMS are the International ones used by REUTERS not the local Abbreviations.

    e.g. National Societe General is NSGE instead of NSGB​

  • Do we report the Interest Rates on dollars in US$ or the equivalent in EGP?

    ​The Interest Rates of Loans & Deposits in US$ must be reported in US$ not the equivalent.​

  • Do we report the Interbank deals done in $ or the Currency exchange deals?

    ​The Money Market Interbank file must only contain Borrowing/Lending deals done in EGP.​

  • Do we report on Other Currencies Interest Rates?

    ​No. For the time being, you are only required to Report the Interest Rates on EGP and USD ONLY.​

  • Regarding Loans Interest Rates, Where do we report the Retail overdraft?

    ​The Retail overdraft must be included with OTHERS.​

  • A Bank register/reviewer/authorizer could not “Save” his action(s). Auction System returns Long message SQL error?

    ​Most of the time, the problem occurs because the user uses the browser back space ï while browsing inside the auction portal system.

    It’s recommended to move between auction system functions and links through the displayed system links and buttons instead of using the browser controls (e.g. back space). The browser back Space ï normally retrieves an expired page, so that “Save” action is not working regardless of the used function (register, review or authorize).​

  •  A Bank Adds/Edits an offer “O” for a selected issued Auction “A”, but both the displayed result and reports show that offer “O” is already added (associated) to another issued Auction “C”?!

    ​The problem description is as follows;

    The Bank register logon to the Auction portal system, Select the link “عروض و مناقصات” and open it in 3 repetitive browser tabs, then the bank register select the auctions from the combo box in each browser tab to “A”, “B” and finally “C”  and starts to fill his offer into them. The most recent versions of Internet explorer “7 & 8” (as a technology) inherits only the last ‘recent’ browser tab information (which is Auction “C” in our scenario) and add any of the registered offers “O1..n” on any of the displayed tabs, upon press “Save حفظ” to the latest record only “Auction C”!

    Resolution: CBE business technology sector has already finished enhancing the Auction portal system to overcome this technology bug, so that only one browser is allowed per session upon using the function Adding/Edit an offer “O”. If a Bank Register needs to Add/Edit more than one offer “O1, O2, ..On” concurrently, he/she must open separate browsers starting with the logon page, logon to each of them using his/her logon credentials and then add/edit the new offers “O1, O2, ..On” on each of them

Anti-Money Laundry
  • How to report a suspicious transaction?

    ​For a bank, to report a suspicious transaction please fill the form "Suspicious Transaction Report for Banks", strictlyfollowing the instruction in the "Suspicious Transaction Reporting form filling instructions"​

  • What are the requirements for registering as Bank Accounts Auditor?

    ​To register as Bank Accounts Auditor, you have to satisfy all the seven requirements foundin the Requirements for registering Auditors​​​