URGENT: Egypt’s central bank raises interest rates by 6%

The Central Bank of Egypt (CBE) on Wednesday raised key interest rates by 6 per cent in a surprise monetary policy meeting this morning.

The CBE’s Monetary Policy Committee (MPC) decided to hike the CBE’s overnight deposit rate, the overnight lending rate, and the rate of the main operation by 600 basis points to 27.25 percent, 28.25 percent, and 27.75 percent, respectively. The discount rate was also increased by 600 basis points to 27.75 percent.

“Building on the decision to raise rates by 200 basis points in February 2024, the MPC decided to accelerate the monetary tightening process in order to fast-track the disinflation path and ensure a decline in underlying inflation. The MPC emphasises that anchoring inflation expectations is critical and warrants this policy response to bring the real interest rate into positive territory.” the MPC statement read.

“Mindful of the lagged impact of the MPC’s decision to raise key policy rates by an additional 600 basis points, the committee will continue to assess the balance of risks surrounding the inflation outlook with the aim of strengthening credibility and placing inflation on a downward trajectory. The MPC judges that this tightening brings the monetary stance to a sufficiently restrictive level, to anchor inflation expectations, and will be maintained for as long as necessary to achieve the desired disinflation course.”