Egypt Cuts Key Rates

The Egyptian central bank cut its key interest rates by 100 basis points, the first time since a currency float in 2016, as inflation rates hit their lowest levels in at least a year, Reuters reported. The bank, at a monetary policy meeting, cut its overnight deposit rate to 17.75% from 18.75% and its overnight lending rate to 18.75% from 19.75%. Since it floated the pound in Nov. 2016, the bank has raised overnight rates by 700 basis points to combat soaring inflation, generating an unprecedented appetite for Egypt’s domestic debt, but slowing down badly needed foreign direct investment. Annual urban consumer price inflation eased to 17.1% in January from 21.9% the previous month, while annual core inflation, which strips out volatile items, fell to 14.35% from 19.86%. Egypt’s economy has been struggling since 2011 when a political uprising drove tourists and foreign investors away, but economic reforms tied to a three-year International Monetary Fund deal signed in 2016 have led to positive economic indicators.