In a special meeting of the Monetary Policy Committee (MPC) of the Central Bank of Egypt (CBE) raised key interest rates by one percent for the first time since 2017.

Ahead of its scheduled meeting on Thursday, the MPC met to increase the overnight deposit rate, the overnight lending rate, and the rate of the main operation by one percent (100 basis points) to 9.25%, 10.25%, and 9.75%, respectively.

“Egypt’s reform program has placed the economy on a strong footing to weather economic disruptions as they emerge… Nevertheless, global inflationary pressures began to build after the world economy emerged from the disruptions caused by the COVID-19 pandemic,” explained the CBE in an official statement.

Global inflationary pressures due to the pandemic, which have continued to build in strength and were amplified by the Russia-Ukraine conflict, as well as rising international commodity prices due to further supply chain disruptions, contributed to the MPC’s decision.

Being keen on safeguarding the achieved macroeconomic stability, the CBE stresses on the importance of the exchange rate flexibility to act as a shock absorber to preserve Egypt’s competitiveness, the statement wrote.

“The MPC reiterates that the path of future policy rates remains a function of inflation expectations, rather than of prevailing inflation rates.”