Egypt Raises Interest Rate To Contain High Inflation

CAIRO – Egypt announced yesterday, to raise the interest rate by 300 basis points, to contain soaring inflation.

In yesterday’s meeting, the Monetary Policy Committee (MPC) in Egypt, decided to raise the central bank’s deposit rate to 16.25 percent, and lending rate to 17.25 percent, said the MPC.

“The MPC decided to raise key policy rates by 300 bps, to contain inflationary pressures and to steer annual headline inflation rates towards its upcoming targeted levels,” it said.

Egypt’s annual consumer inflation rate “continued to accelerate,” rising from 16.2 percent in Oct, to 18.7 percent in Nov, the highest rate since Dec, 2017, when it reached 21.9 percent.

“Similarly, annual core inflation continued its upward trend that started over a year ago, recording 21.5 percent in Nov, 2022, its highest rate since Nov, 2017,” according to the MPC.

The Egyptian economy has been greatly affected by the COVID-19 pandemic, and the Russia-Ukraine conflict, that led to increases in cost of food and oil imports, given that, the most populous Arab country is one of the world’s largest importers of wheat, most of which came from Russia and Ukraine.

The MPC said that, on the global front, forecasts for international commodity prices have slightly eased, compared to those underlying the previous MPC meeting. “Nonetheless, the outlook for international commodity prices remains uncertain,” it said.

The rising inflation in Egypt followed two devaluations of the Egyptian pound against the U.S. dollar this year, the latest of which was on Oct 27, when Egypt’s central bank lowered the value of the pound about 14.5 percent, and has since been allowing it to weaken gradually.

Last week, the International Monetary Fund (IMF) approved a loan of three billion U.S. dollars to Egypt, over 46 months, as a support package to help the country with structural and economic reforms.

The IMF said that, the financial support was granted in exchange for an economic reform programme by the Egyptian government, which it hopes, can pave the way for “sustainable, inclusive and private-sector-led growth.”

Source: NAM NEWS NETWORK