Thursday March 30th, 2023
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Central Bank of Egypt Raises Interest Rates by One Percent

The hike in interest rate was prompted by uncertainties brought about by the Russian invasion of Ukraine.

Cairo Scene

The Central Bank of Egypt has decided to raise their interest rates by 1%, to a total of 9.75%. The overnight deposit rates, lending rates, and the central bank’s main operation rates are now set at 9.25%, 10.25% and 9.75%, respectively. As a result of this, the Egyptian pound slipped, bringing its exchange rate with the US dollar up to EGP 17.5 from EGP 15.6.

The increases followed an unscheduled meeting within the bank's Monetary Policy Committee, prompted by the ongoing war in Ukraine. The meeting discussed the war’s effects on Egyptian trade with Russia and Ukraine (80% of Egyptian imports of wheat come from these two nations alone), as well as the massive tourism that normally comes from these two countries in large waves.

This is the first time the Central Bank of Egypt has raised interest rates since 2017. “Rising international commodity prices resulting from further supply chain disruptions in addition to increased risk-off sentiment have added to domestic inflationary pressures as well as external imbalances,” the Central Bank explained in a statement. The Monetary Policy Committee is scheduled to meet again on Thursday to review the key interest rates.