BREAKING: Egypt’s central bank hikes key interest rates by 200 bps

Egypt’s central bank hiked overnight interest rates by 200 basis points on Thursday, in an attempt to bring soaring inflation under control.

The Central Bank of Egypt’s (CBE) Monetary Policy Committee (MPC) decided to raise the overnight deposit rate, overnight lending rate, and the rate of the main operation to18.25 percent, 19.25 percent, and 18.75 percent, respectively, it said in a statement.

The central bank also raised its discount rate by 2 percent to 18.75 percent.

Containing inflationary effects 

The MPC further said that additional tightening in the monetary stance is on the way, “not only to contain demand side pressures as mentioned above, but also to avoid broad and persistent inflationary effects that could emanate from the supply shocks, with the aim of anchoring inflation expectations,” it added.

Earlier in a meeting Wednesday, the Egyptian Cabinet said it wanted to confine inflation to a 16 percent rate in fiscal 2024. However, Morgan Stanley expects headline inflation to peak at nearly 38 percent year-on-year by August-September this year and average 25 percent year-on-year for the financial 2023 year and 27 percent for the financial 2024 year.