CBE Raises Interest Rate by 2% on Deposits, Lending

On Thursday, the Central Bank of Egypt (CBE) stated that the global economy has faced many shocks and challenges that it has not witnessed for years due to the Corona pandemic and closure policies, and the Russian-Ukrainian war, which had severe economic repercussions.

The CBE added that these challenges have caused pressure on the economy as it faced an exit from foreign investors' capital as well as a rise in commodity prices.

In light of the above, reform measures have been taken to ensure macroeconomic stability and achieve economic growth, so the exchange rate will reflect the value of the Egyptian pound against international currencies.

In order to support the medium-term price stability objective, the Monetary Policy Committee decided in its extraordinary meeting to raise the overnight deposit and lending rates and the central bank’s main operation rate by 200 basis points to reach 13.25%, 14.25%, and 13.75%, respectively.

The credit and discount rate was also raised by 200 basis points to 713.75%.

It is expected that the increase in global and local prices will lead to a higher general inflation rate than the target by the Central Bank of 7 (±2%) on average during the fourth quarter of 2022.

The Committee emphasizes that the objective of raising interest rates is to contain the inflationary pressures caused by the demand side, the high growth rate of domestic liquidity, inflationary expectations, and the secondary effects of supply shocks.

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