Egypt expected to raise interest rates after US Fed decision

Egypt expected to raise interest rates after US Fed decision

The CBE is awaiting the latest indicators of inflation in the local market, which is scheduled to be revealed on Tuesday, to determine how much the interest rates will increase.

In an extraordinary meeting held on March 21, 2022, the MPC decided to raise the basic interest rates in the CBE by 1% to reach 9.25% for deposits, 10.25% for lending, and 9.75% for the credit and discount rate and the price of the main operation of the bank.

The committee said in a statement accompanying this decision that global inflationary pressures began to re-emerge after signs of recovery of the global economy from the turmoil caused by the pandemic. This is due to the developments in the Russian-Ukrainian conflict.

On top of those pressures comes a noticeable rise in global commodity prices, supply chain disruptions, and high freight costs, in addition to the fluctuations of financial markets in emerging countries, which led to domestic inflationary pressures and increased pressure on the external balance.

The MPC pointed out that it believes in the importance of exchange rate flexibility to serve as a tool to absorb shocks and maintain Egypt’s competitiveness.

In light of these developments, and by looking at the CBE’s target inflation rate, which