Cairo, Egypt – The Central Bank of Egypt (CBE) raised key interest rates by 200 bps for the first time in 2023 on Thursday as it struggles to control soaring inflation.
“In its meeting today, the Monetary Policy Committee (MPC) decided to raise the Central Bank of Egypt’s (CBE) overnight deposit rate, overnight lending rate, and the rate of the main operation by 200 bps to 18.25 percent, 19.25 percent, and 18.75 percent, respectively. The discount rate was also raised by 200 bps to 18.75 percent,” the CBE said in a statement Thursday.
The CBE didn’t raise interest rates during its February meeting.
The increase is in line with analysts’ expectations, who suggested a hike ranging between two and three percent after seeing inflation hit record figures in Egypt.
The CBE explained that annual urban headline inflation continued to accelerate to 25.8 percent and 31.9 percent in January and February 2023, respectively.
“Similarly, annual core inflation recorded 31.2 percent in January 2023 and marked a historical high in February 2023 by recording 40.3 percent,” the CBE said.
“The observed strong dynamics reflect the combined effect of several factors. These factors include the supply chain disruptions domestically, the depreciation of the Egyptian pound, demand side pressures as evidenced by developments in real economic activity relative to potential capacity and high broad money growth out-turns. In addition, the seasonal impact of Ramadan affected both Umrah trips and food prices,” the CBE added.