Cairo: The Central Bank of Egypt raised overnight interest rates by 100 basis points on Thursday in a surprise move, saying it sought to contain inflationary pressures and anchor inflation expectations.
The lending rate was increased to 20.25 per cent and the deposit rate to 19.25 per cent, the bank’s Monetary Policy Committee said in a statement.
“The MPC judges that inflation rates are likely to peak in the second half of 2023 before beginning a disinflation path towards the CBE’s preannounced targets afterwards, supported by the cumulative monetary policy tightening to date,” the statement said.
Annual urban inflation accelerated to an all-time high of 35.7% in June from 32.7 per cent in May.
“Tackling inflation seems to be the top priority for the CBE. Our preliminary estimates indicate urban CPI to have increased to 36.1 per cent in July,” Allen Sandeep, of Naeem Brokerage, said.
The central bank has been targeting inflation of 5 per cent to 9 per cent by the final quarter of 2023 and 3 per cent to 7 per cent by the end of 2026.