The Central Bank of Egypt (CBE) raised interest rates by 6%, or 600 basis points (bps) to 27.25%, as part of a move to address inflation, the Monetary Policy Committee (MPC) decided in a special unscheduled meeting.
The CBE also lifted the overnight deposit rate and overnight lending rate to 28.25% and 27.75%, respectively, and decided it would allow the market to determine the exchange rate.
The discount rate was also raised by 600 bps to 27.75%, CBE said in a statement after a special meeting held today, March 6.
The bank acknowledged that the tighter stance “could result in a short-term contraction in the private sector’s real credit growth”, but stressed the need to address rising inflation, which poses “greater risks to its stability”.
The CBE added that, although annual inflation figures have been recently declining, they are expected to remain substantially above the authority’s inflation target of 7% (±2 percentage points) on average in 2024 Q4.
The new rates “will be maintained for as long as necessary to achieve the desired disinflation course”, the CBE added.Â
