CBE announces a 2% hike in interest rates in exceptional meeting

The Monetary Policy Committee (MPC) of the Central Bank of Egypt (CBE) has raised the key interest rates in an unscheduled meeting by two percent (200 bps) to reach 13.25 percent, 14.25 percent, 13.75 percent, and 13.57 percent for the overnight deposit rate, the overnight lending rate, the rate of the main operation, and the discount rate, respectively.

In a statement released on Thursday morning, CBE said that it aims to anchor inflation projections and also to contain demand side pressures and higher local inflow growth as well as the secondary effects of supply shocks.

The CBE said that elevated global and domestic prices that are expected to keep headline inflation above the MPC’s preannounced target of seven percent (±2 percent) on average in through the fourth quarter of 2022.

The MPC will continue to announce the inflation targets that started in 2017, consistent with the targeted downward path of inflation rates.

“The global economy faced multiple shocks and challenges, the likes of which have not been seen in years. Recently, global markets have been subject to the COVID19 pandemic that put the world on lockdown, followed by the Russian-Ukraine conflict, which had dire economic ramifications. Consequently, Egypt weathered large capital outflows and rising commodity prices”, the CBE said.

In its latest meeting, the Monetary Policy Committee (MPC) has maintained key interest rates for the third time since the initial three percent hike following the onset of the Russian-Ukrainian war.