Egypt CB Fighting Against Odds

The Central Bank of Egypt opted to raise overnight interest rates on interbank deposits and lending by 2% this week, citing the need to contain runaway inflation, zawya reported. The move, taken during the CBE’s Monetary Policy Committee meeting on Sunday, is the second of its kind since the CBE devalued the pound and abandoned currency controls in November. The total hike in interest rates since then amounts to 5%. On Sunday, the overnight deposit rate was upped to 16.75%, while the lending rate was raised to 17.75%. Economists, bankers and businessmen expressed worries about the effect of the move on growth rates that are already as low as 3.5%. The annual inflation rate came in at 32% in April, its highest level since 1986. However, the monthly increase was slower at 1.7%, the slowest since October. The government is worried about social unrest being fed by the record high inflation rates.