The Central Bank of Egypt (CBE) unexpectedly raised interest rates by 600 basis points in an extraordinary meeting.
According to the statement released by the CBE, the benchmark overnight deposit interest rate was increased from 21.25% to 27.25%.
The statement issued after the Monetary Policy Committee meeting highlighted the pressure on the domestic economy due to the existence of the parallel foreign exchange market and the scarcity of foreign exchange limiting economic growth. It also mentioned the continuing global economic shocks and the accumulation of external effects arising from global inflation pressures.
The committee stated, “In line with the continuation of CBE’s tightening stance, the Monetary Policy Committee decided to increase CBE’s overnight deposit interest rate, overnight lending interest rate, and the main operation interest rate at its special meeting.”
In February, consumer prices in Egypt rose by an annual rate of 29.8%, with core inflation reaching 29%.
The committee emphasized the critical importance of stabilizing inflation expectations and ensured the policy response that would bring the real interest rate into the positive zone.
Other interest rates used by the CBE were also increased to the same level: the overnight lending interest rate was raised from 22.25% to 28.25%, and the discount rate was increased from 21.75% to 27.75%.
source: tr.investing.com/ prepared by Melisa Beğiç