In order to tame soaring prices in the country, the Central Bank of Egypt has raised its overnight interest rates by 200 basis points.
The bank’s Monetary Policy Committee increased the deposit rate to 11.25 percent from 9.25 percent and the lending rate to 12.25 percent from 10.25 percent, it said in a statement accompanying the decision.
It cited an increase in annual urban inflation to 13.1 percent in April from 10.5 percent in March, its highest since May 2019.
Prices were pushed up in part by a currency depreciation and higher wheat prices after the Ukraine crisis, the statement added.
“The MPC decided that raising policy rates is necessary to contain inflationary pressures which is consistent with achieving price stability over the medium term,” it said.
“The elevated annual headline inflation rate will be temporarily tolerated relative to the CBE’s pre-announced target” of between 5 percent and 9 percent before declining after the fourth quarter, it said.
Eighteen analysts polled by Reuters had expected the bank to raise the median deposit rate to 11 percent and its lending rate to 12.25 percent.