Egypt’s central bank raised its key interest rates by 100 basis points citing increased domestic inflationary pressures as well as external imbalances.
At its special meeting on Monday, the Monetary Policy Committee of the Central Bank of Egypt raised its overnight deposit rate to 9.25 percent and the overnight lending rate to 10.25 percent.
The rate of the main operation was lifted to 9.75 percent. The discount rate was also raised by 100 basis points to 9.75 percent.
The central bank said inflationary pressures became amplified with the recent Russia-Ukraine conflict.
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.
Further, the central bank stressed on the importance of the exchange rate flexibility to act as a shock absorber to preserve Egypt’s competitiveness.
The MPC reiterated that the path of future policy rates remains a function of inflation expectations, rather than of prevailing inflation rates.
The bank said it will continue to closely monitor all economic developments and will not hesitate to utilize all available tools to achieve its price stability mandate over the medium term.