Egypt's Central Bank Raises Interest Rates on Deposits, Loans by 2 Pct

On Thursday, the Central Bank of Egypt (CBE) raised interest rates on deposits and loans by two percent.

The step aims to tackle soaring inflation and restore the allure of its local debt with foreign investors amid a global wave of monetary tightening.

Consumer-price growth in Egypt hit its highest level in almost three years in April as food costs spiked due to the war in Ukraine. The figure also reflected a devaluation of the Egyptian pound by more than 15% on March 21, the same day authorities hiked interest rates for the first time since 2017, by 100 basis points.

Thursday’s decision also shows an effort to partly reverse the decline in Egypt’s inflation-adjusted interest rate at a time when global central banks led by the US Federal Reserve move to combat surging prices with higher borrowing costs.

Egypt’s central bank “clearly has to raise rates in light of the rising inflation expectations and Fed tightening,” Mohamed Abu Basha, head of macroeconomic research at investment bank EFG Hermes, said before the decision.