How CBE raising interest rates will affect prices in Egypt: An expert answers

How CBE raising interest rates will affect prices in Egypt: An expert answers

The Central Bank of Egypt’s decision to raise the interest rate by 200 basis points on deposits and borrowing comes to counter the wave of devastating high inflation rates by the US Federal Reserve, al-Sayed Khedr, an economist, said, adding the step will lead to a rise in the exchange rate of the US dollar in the coming period, which in turn will have repercussions on prices.

Khedr told Al-Masry Al-Youm that permanent reliance on monetary policy in Egypt must change, stressing the need to enhance Egyptian industries and increase production and real investments to counter the current economic circumstances.

“We will witness a state of looseness in global markets, and a continued rise in inflation rate,” he said, adding the continued high price and inflation rates will require the of policies to rationalize spending.

Khedr pointed out that the rise in prices will lead to an erosion of purchasing power, which means that the contractionary monetary policy will not have an impact on the improvement of the performance of economic indicators.

Purchasing power will decline with the rising wave of inflation that swept most countries of the world and caused a rise in the prices of basic commodities, especially food prices, especially that