Combined, the MPC has now raised key interest rates by a total of 500 bps (5%) since the start of the Russian/Ukrainian conflict
The Central Bank of Egypt’s Monetary Policy Committee (MPC) has announced a raise in key interest rates during its final meeting of 2022, upping them by 3% (300 basis points), a higher climb than what most economists have been predicting all week.
The MPC raised the overnight deposit rate, overnight lending rate, and the rate of the main operation to 16.25%, 17.25%, and 16.75%, respectively. The discount rate was also raised by 300 basis points to 16.75%.
Combined, the MPC has now raised key interest rates by a total of 500 bps (5%) since the start of the Russian/Ukrainian conflict.
The MPC had raised key interest rates by a total of 500 bps, in three separate moves, since the start of the war in Ukraine.
Despite local economic activity up by 4.4% during Q2 and a positive outlook for Q4, the MPC cited the uncertain nature of international commodity prices as the main reason to the raise in rates.
The MPC added that contributing factors to the rise in prices were expected global economic slowdown, the loosening of COVID-19 restrictions in China, and the continued uncertainty from the Russia-Ukraine conflict on the overall outlook for global supply chain.
“The MPC judges that demand side pressures have recently increased, as evidenced by developments in real economic activity relative to potential capacity, higher broad-based inflation outturns, and higher broad money growth,” the CBE explained in a statement.
“The committee notes that the future path of inflation remains a function of the cumulative tightening in its stance to date and the lag with which monetary policy tools operate,” it added.
This is the 4th time that the MPC has decided to raise key interest rates since the start of the Russia-Ukraine war in February, which has led to increased inflationary pressure on the Egyptian economy.
