The Central Bank of Egypt has decided to raise interest rates by 50 basis points in an effort to mitigate inflation after the bank’s Monetary Policy Committee met on Thursday.
The bank raised the overnight deposit rate, the overnight lending rate and the rate of the CBE’s main operation to 9.25%, 10.25% and 9.75% respectively, read the CBE’s statement, Ahram Online reported.
“Inflationary pressures have been slowly building up as evident in the increase in non-food prices, which have contributed to headline and core inflation rates,” the bank said.
The bank also expected that inflation would continue to rise, despite the fall in prices internationally, due to “underlying domestic inflationary pressures.”
Inflation climbed to 11.1% in November from 9.7% in the previous month.
Out of the five economists interviewed by Ahram Online earlier this week, three predicted that the CBE would raise interest rates, either fully or partially.
The Monetary Policy Committee of the CBE postponed its rate decision last Thursday, December 17, by one week, citing a need to achieve “full coordination and commitment on macroeconomic objectives with the government, including targets for fiscal consolidation, current account outturns and the implementation of urgent structural economic reforms,” according to its statement.
Despite the inauguration of projects, such as the Suez Canal Area Development Project and huge investment pledges, the economic situation in Egypt has taken a turn for the worse in recent months, according to a Focus Economics report published last Tuesday.
The Egyptian economy is suffering imbalance as a result of the deteriorating security situation, which is anticipated to disrupt the growth of the country. Data showed a slump in the industrial production, the non-oil sector, and the revenues of the Suez Canal, according to the report.
